Unveiling Apple’s Surprising Q3 Earnings: Is Apple Stock a Buy After Beating Estimates?
Apple (NASDAQ: AAPL) stock is on the rise as investors flock to the iPhone maker following its impressive earnings report that exceeded expectations. Revenue surged by 5% year-over-year to a record $85.8 billion in the fiscal third quarter, surpassing analysts’ projections of $84.4 billion. Net income also saw an 8% increase to $21.5 billion, or $1.40 per share, beating estimates of $1.35 per share.
Despite the positive numbers, there are some concerns hidden within the results. The main highlight is the decline in iPhone sales, which dropped by 1% year-over-year to $39.3 billion. This downward trend in iPhone sales has been ongoing, with a 10% decrease over the past year. However, Apple has revealed exciting updates for the new iOS 18 operating system and iPhone 16 set to launch this fall, which could potentially boost sales.
Another factor contributing to the decline in iPhone sales is the decrease in sales in China, Apple’s third-largest market. Sales in China dropped by 7% year-over-year to $14.7 billion in the third quarter. On a positive note, Apple’s Services revenue, including Apple TV, iTunes, and apps, saw a significant increase of 14% year-over-year to a record $24.2 billion.
As investors ponder whether Apple stock is a buy, it’s essential to note that the company expects similar revenue growth in the upcoming quarter. With the launch of the new iPhone 16 and Apple Intelligence AI upgrades in September, there is optimism for a turnaround in iPhone sales. Analysts have given mostly moderate price target increases for Apple stock post-earnings, with a median price target of $222 per share.
However, with Apple stock currently trading at 34 times earnings, some caution is advised. It might be wise to wait for a better entry point closer to the iPhone launch, especially considering the volatile market conditions for overpriced big tech stocks.
In conclusion, while Apple’s Q3 earnings beat estimates and show promise for the future, cautious optimism is recommended for potential investors. Keep an eye on developments leading up to the new iPhone launch and assess the market conditions before making any investment decisions.