Apple is about to reveal the financial results of its most recent quarter, and Wall Street analysts are preparing for a whole lot of ho-hum. They’re predicting a very slight drop in revenue and earnings, during a traditionally slow time of the year for Apple sales.
That said, Apple has a habit of beating analysts’ predictions. So Thursday’s earnings call could be more upbeat than expected.
Don’t expect fireworks from Apple’s June quarter financial results
Apple is coming off a weak January-through-March period. Total revenue slipped 3% year over year, led mostly by a painful 31% drop in Mac revenue. This was somewhat offset by iPhone revenue rising slightly.
Plus, the pandemic brought an unexpected surge of customers for Apple gear. Two years ago, total June quarter revenue increased by a whopping 36% year-over-year, for example. But post-pandemic, people don’t need as many new Macs and iPads. If Wall Street predictions prove correct, Apple’s June quarter will its third in a row with an annual revenue decline.
Apple’s Q3 2023 earnings could surprise us
Of course, the analysts’ predictions for Apple’s most-recent financial quarter are averages, so there are some who think the Mac-maker did better.
Dan Ives with Wedbush Securities is upbeat, especially about iPhone. “It’s unique that this late in the iPhone cycle with iPhone 15 around the corner this Fall, Apple is seeing such strong iPhone 14 demand,” Ives wrote in a recent research note.
While iPhone is Apple’s cash cow, analysts closely watch revenue from Apple services. This is the umbrella term for the App Store, Apple Music, Apple Pay, etc. — the areas where future revenue growth is most likely to come from. In the June quarter, analysts predict services revenue to increase 6%.
Don’t expect big revelations
With Q3 typically ho-hum, analysts and other investors will be paying attention during Thursday’s earnings call to Apple’s guidance for the rest of 2023. For one thing, they want to know how confident Apple’s leadership team is about iPhone 15.
But don’t anticipate any big surprises. Apple is very careful on earnings calls to talk about the future in vague terms.
There’s a question-and-answer session, and CEO Tim Cook is likely to be asked about his company’s secret plans for generative artificial intelligence products similar to ChatGPT. But he might not have much to talk about.
Ming-Chi Kuo, an analyst with TF International Securities, said in a Wednesday research note, “The progress of Apple’s generative AI is significantly behind its competitors, so I don’t expect Apple to talk too much about AI on the earnings call. At present, there is no sign that Apple will integrate AI edge computing and hardware products in 2024.”
Executives always decline to talk about unannounced products. Occasionally some analyst will ask about Apple car, but Cook and Co. always decline to confirm that’s even a thing.