Tech heavyweight Apple AAPL is set to report quarterly results on Thursday after the bell. Apple, a Zacks Rank #3 (Hold), boasts a stellar track record of exceeding earnings estimates. As AAPL stock hovers near all-time highs, is
Apple’s AAPL first-quarter fiscal 2024 results, to be reported on Feb 1, are expected to reflect improving PC market, as well as steady growth in the Services business.Apple expects Mac revenues to significantly accelerate compare
After a tough start to the year, the S&P 500 topped the 4,900 milestone for the first time in the latest trading session. This week is packed with more than 100 corporate earnings, a Federal Reserve policy meeting and the job
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Futures for Canada's main stock index were subdued on Tuesday ahead of earnings updates from Big Tech companies in the United States, domestic GDP data and the Federal Reserve's interest rate decision later this week.
Global stocks traded at two-year highs on Tuesday ahead of a Federal Reserve meeting, while Asian equities took a knock from the court-ordered liquidation of Chinese property giant Evergrande.
The S&P 500 index delivered a gain of 24.3% last year, but it was led higher by a group of stocks dubbed the "Magnificent Seven." This cohort includes:
Designed to provide broad exposure to the Large Cap Growth segment of the US equity market, the Vanguard Russell 1000 Growth ETF (VONG) is a passively managed exchange traded fund launched on 09/22/2010.
Technology giants Amazon (
NASDAQ:AMZN
) and Apple (
NASDAQ:AAPL
) will release quarterly earnings after the market closes on Thursday, February 1. Analysts’ consensus ratings reflect that Wall Street favors AMZN over AAPL ahead of their upcoming earnings.
In particular, AMZN’s quarterly numbers should benefit from solid holiday sales numbers, stabilization in its cloud business (AWS), and its focus on reducing costs. After the Q4 earnings release, its stock price could rise further.
On the other hand, Apple offered lower-than-expected holiday sales guidance as its hardware sales are under pressure. If the company reports weak hardware sales in Q1, its share price may take a hit to some extent. Consequently, analysts are more bullish about AMZN stock.
With this backdrop, let’s look at the Street’s forecast for their upcoming earnings.
AMZN: Q4 Expectations
Analysts expect AMZN to report revenue of $165.96 billion in Q4, up over 11% year-over-year. Solid
holiday sales, durable growth in the advertising segment, and strength in its cloud business should drive its top line.
Meanwhile, leverage from higher sales and cost reductions will likely cushion its earnings. Wall Street projects that the e-commerce giant will
post EPS of $0.8 in Q4, up from $0.03 in the prior-year quarter.
Is Amazon Stock Expected to Go Up?
AMZN stock has gained over 60% in one year. Despite this notable growth, Wall Street is bullish about its prospects.
Ahead of Q4 earnings, Telsey Advisory analyst Joe Feldman increased AMZN’s price target to $185 from $165. The analyst expects the company to benefit from solid holiday sales, the stabilization of AWS, and its focus on profitability.
Including Feldman, AMZN stock has 37 unanimous Buy recommendations for a Strong Buy consensus rating.
Analysts’ average price target of $187.77 suggests a further upside potential of 16.44%.
It’s worth highlighting that
options traders are pricing in a +/- 6.57% move on earnings, slightly lower than the previous quarter’s earnings-related move of 6.83%. The expected move is determined by computing the at-the-money straddle of the options closest to the expiration after the earnings announcement.
Learn more about TipRanks’ Options tool here.
AAPL – Q1 Expectations
Analysts expect Apple to report revenue of $117.99 billion in the first quarter of Fiscal 2024. This is roughly in line with the company’s prior-year sales of $117.22 billion. Softness in iPhone demand and an expected year-over-year decline in iPad and Wearables, Home, and Accessories will likely hurt AAPL’s top-line growth rate. However, strength in the Services business could continue to drive sales.
Wall Street projects that AAPL will
post earnings of $2.1 per share, up from $1.88 reported in the prior-year quarter. The analysts expect Apple’s bottom line to benefit from cost reductions.
Is Apple a Buy, Hold, or Sell?
Apple stock has gained nearly 35% over the past year, despite ongoing pressure on its product sales. Goldman Sachs analyst Mike Ng reiterated a Buy recommendation on AAPL stock on January 24. However, he lowered AAPL’s price target to $223 from $227. Further, the analyst lowered his EPS estimates. The analyst sees short-term headwinds from lower product sales and tough year-over-year comparisons.
Overall, Apple stock has received 22 Buy, eight Hold, and one Sell recommendations for a Moderate Buy consensus rating.
Analysts’ average price target of $205.85 implies an upside potential of 7.36% from current levels.
Meanwhile,
options traders are pricing in a +/- 3.70% move on earnings, higher than the previous quarter’s earnings-related move of -0.52%.
Bottom Line
Both the tech giants, AMZN and AAPL, possess solid fundamentals that can drive long-term growth. However, analysts favor AMZN stock over AAPL ahead of the quarterly print. Further, AMZN stock has outperformed AAPL over the past year and offers a higher upside potential from current levels.
Disclosure
It’s a highly critical week for earnings, with several mega-cap technology companies slated to reveal quarterly results. The strength of these mega-cap names has been admired by all, with many expecting positive results to keep ov
The NASDAQ 100 After Hours Indicator is up 5.76 to 17,602.03. The total After hours volume is currently 91,036,500 shares traded.The following are the most active stocks for the after hours session: Alphabet Inc. (GOOGL) is unchanged at $153.51, with 3,514,940 shares traded.GOOG
U.S. stocks advanced on Monday as market participants looked ahead to this week's slew of megacap earnings, economic data and the Federal Reserve's monetary policy meeting.
U.S. stocks advanced on Monday as market participants looked ahead to this week's slew of megacap earnings, economic data and the Federal Reserve's monetary policy meeting.
Apple (
NASDAQ:AAPL
), one of the largest manufacturers of high-tech devices in the world, has faced scrutiny for failing to launch a blockbuster product in recent years. The Apple Vision Pro, the company’s first virtual reality headset, is widely seen as a potential silver lining that could become the biggest product launch since AirPods.
The Apple Vision Pro will be
available for purchase in the U.S. starting on February 2, and the company is yet to announce an international launch date. Although I am beginning to be optimistic about what’s in store for Apple this year, I am neutral on AAPL stock, nonetheless.
Looking Beyond Encouraging Demand Trends
The Apple Vision Pro has been available for pre-order since January 19, starting at a price of $3,499 for the 256 GB version. For comparison, Oculus Quest 3, the latest AR headset developed and sold by Meta Platforms, Inc. (
NASDAQ:META
), starts at $499 for the 128 GB version. The hefty price of the Apple Vision Pro raised concerns when the product was unveiled last June, but data from the first weekend of pre-order availability suggests strong initial demand.
According to popular Apple analyst Ming-Chi Kuo, Apple sold between 160,000 and 180,000 Vision Pro units during the first pre-order weekend, which suggests the device was sold out, as expected, within the first weekend itself. As the analyst observed and reported, expected shipping times for all Vision Pro devices extended to five to seven weeks immediately after pre-ordering was enabled – a clear indication that the Vision Pro was sold out.
There is, however, a major difference between blockbuster iPhone models and the Vision Pro. Typically, iPhones see a steady rise in shipping times for at least 48 hours after the availability of pre-ordering, but Vision Pro shipping times remained steady in the first 48 hours after the initial burst. This, according to analyst Ming-Chi Kuo, serves as a warning sign.
Apple has a cult-like follower base that lines up to purchase new devices as and when they are released. A blockbuster product will not only attract this strong follower base but will also appeal to the masses. The waning demand for the Vision Pro after an initial burst suggests the VR headsets are yet to attract mass tech consumers.
The AR/VR Market Has Room for Disruption
Empirical evidence suggests that Apple has been wildly successful in aggressively gaining market share in various consumer tech niches such as smartphones, personal computers, and smart watches despite not enjoying first-mover advantages in any of these markets. Apple’s success stems from the company’s proven ability to develop appealing tech products based on a deep understanding of consumer preferences.
Today, the AR/VR headset market is at an infant stage, with IDC projecting just 8.1 million AR/VR device shipments in 2023. According to
Counterpoint Research, Meta dominated this market in the third quarter of 2023, accounting for 49% of all device shipments. Counterpoint data reveals that headset shipments plummeted by 29% year-over-year in Q3 due to a lack of compelling headset launches.
The relatively small size of the AR/VR headset market leaves ample room for disruption, and Apple has a reputation for successfully exploiting similar opportunities in other market segments.
Apple’s Scale Problem
Apple has grown in leaps and bounds since the first-ever iPhone was released in 2007. The massive size and scale of the company, however, has made it difficult for Apple to meet Wall Street’s growth expectations in recent years. For context, in Fiscal 2023, total revenue declined close to 3% year-over-year to $383 billion, while net income also declined by 2.8%.
The problem with Apple’s massive scale is that it takes a wildly successful product to move the needle for the company from a financial performance perspective. In 2024, Apple expects to sell 500,000 Vision Pro units, bringing in revenue of at least $1.75 billion. This may seem like an encouraging figure in isolation, but in comparison to the almost $400 billion in revenue Apple is projected to bring in this year, Vision Pro sales seem trivial.
Even if Apple sells double the projected Vision Pro units for 2024, this segment will still account for less than 1% of total company sales this year. Going by this understanding, it seems fair to conclude that Vision Pro will fail to meaningfully impact Apple’s fundamentals in the foreseeable future.
The highly anticipated VR headset, however, has the potential to improve the market sentiment toward Apple and ascertain the company’s position as a dominant tech innovator if unit sales exceed Wall Street expectations this year.
Is Apple Stock a Buy, According to Wall Street Analysts?
Apple is one of the most followed companies in the market. Not surprisingly, Wall Street analysts are often divided about Apple's prospects, but they're currently bullish overall. The stock earns a Moderate Buy consensus rating based on 22 Buys, eight Holds, and one Sell assigned in the past three months. Here's what some analysts have said about Apple.
On January 18, Bank of America Securities upgraded Apple and raised the stock's price target from $208 to $225, citing the company’s promising AI product roadmap, among other bullish developments such as the improved outlook for the services segment. BofA also claimed that Vision Pro sales could eventually surpass iPad revenue in the long run, with VR going mainstream.
On January 23, Bank of America (
NYSE:BAC
) added Apple to its US 1 list, which is a collection of the bank’s best investment ideas.
Morgan Stanley (
NYSE:MS
), in its Weekly Warm-Up Report, published on January 22, identified Apple as one of the top high-quality growth stocks in the U.S. among 56 other companies that are seemingly well-positioned to deliver alpha returns this year.
Last week, Piper Sandler highlighted Apple as the 3
rd most attractive pick out of Magnificent 7 stocks, behind Alphabet Inc. (
NASDAQ:GOOG
)(
NASDAQ:GOOGL
) and Meta Platforms.
Overall, based on the ratings of 31 Wall Street analysts, the
average Apple stock price target is $205.85, which implies upside of 7.5% from the current market price.
The Takeaway: Vision Pro is Exciting, Apple’s Valuation Is Not
Apple is heading into exciting days, with the first batch of Vision Pro units expected to be shipped out in the coming weeks. Although the Vision Pro may not have a strong impact on Apple’s earnings this year, the market may reward Apple handsomely if the device attracts tech bulls and positive reviews from tech enthusiasts. Apple, however, looks expensively valued at a forward P/E of 29 compared to its five-year average of 25.
Disclosure
U.S. stocks rose modestly on Monday, with few catalysts to spark much conviction before this week's slew of megacap earnings, economic data and the Federal Reserve's monetary policy meeting.
According to at least one Wall Street analyst, the Russell 2000 Index may gain up to 50% if the Fed goes through with multiple interest rate cuts in 2024. So, how can you invest in this small-cap index right now?
Amazon AMZN is scheduled to report fourth-quarter 2023 results on Feb 1.For the fourth quarter, the company expects net sales between $160 billion and $167 billion, which represents 7-12% year-over-year growth.The Zacks Consensus
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