apple

Apple stock (NYSE: AAPL) stock is trading higher in US price action today amid the broad-based rally in US markets after the July inflation reading came in lower than feared. However, there are signs of a slowdown in PC and smartphone sales.

Foxconn, the leading contract manufacturer of Apple iPhones posted better than expected earnings for the June quarter. However, the company warned of a sales slowdown in the current quarter citing “geopolitics, inflationary pressure and the Covid pandemic.”

To be sure, Foxconn, which has also diversified into contract manufacturing for electric cars, is not the only company warning of slowing smartphone sales. Earlier this week, Micron warned of a “challenging market environment” in a regulatory warning. The company had anyways provided a dismal sales forecast in June.

Since then, Nvidia and Intel have spooked markets with their commentary. Nvidia, which reports earnings later this month, lowered its sales guidance by almost $2 billion on slowing demand for gaming laptops.

Despite concerns over falling smartphone sales, which Micron predicted would be 5% lower YoY in 2022, Apple’s sales have been strong. iPhone revenues came in at $40.67 billion in the June quarter which was 3% higher than the corresponding quarter last year and ahead of the $38.33 billion that analysts were expecting. However, Mac and iPad revenues fell in the quarter.

The company’s guidance was also reasonably strong, It said, “Overall, we believe our year-over-year revenue growth will accelerate during the September quarter compared to the June quarter despite approximately 600 basis points of negative year-over-year impact from foreign exchange.”

Apple said that the negative impact of the supply chain outages in the current quarter would be lower than in the previous quarter. Foxconn also talked about supply chains getting better.

Wall Street Analysts See Apple as a Buy

Apple is a cash-rich company and generates loads of cash every quarter. It generated operating cash flows of $22.9 billion in the June quarter, a new record for the company. It returned $28 billion in cash to stockholders in the quarter, mostly through buybacks. The company ended the quarter with net cash (total cash minus debt) of $60 billion. It eventually intends to reach a cash-neutral position which would mean more buybacks.

Wall Street analysts were also impressed with the company’s earnings. While Goldman Sachs reiterated the stock as neutral, Morgan Stanley reiterated the stock as overweight and advised investors to buy Apple stock. Morgan Stanley termed Apple as “resilient” and said that it remains its top pick while maintaining its $180 target price.

Notably, Apple is expected to launch multiple new products, including an AR/VR headset over the next year. By the middle of this decade, analysts expect Apple to also enter electric cars. However, so far, we have scant details about the company’s electric car and autonomous driving project, which is rumored to have an internal code name called Project Titan.

Currently, Tesla sells the most electric cars in the US, the world’s most profitable market. In the first half of 2022, Tesla lost the global market leadership position to Warren Buffett-backed BYD.

Tesla stock is meanwhile trading higher today after Elon Musk tweeted that Tesla Semi deliveries would start in 2022 while Cybertruck deliveries would begin next year.

The Cybertruck is the company’s pick-up model which was unveiled in 2019. It was set to go into production this year but Tesla delayed it by a year to focus on producing existing models amid supply chain issues.

Did Warren Buffett Buy More AAPL Shares in Q2?

In the first quarter of 2022, Warren Buffett bought the dip in Apple stock and invested $600 million into the iPhone maker. It was the first time since 2018 when the Oracle of Omaha bought Apple stock.

Berkshire Hathaway’s net buying activity was quite subdued in the second quarter. Later this month. We’ll get to know whether Buffett bought more Apple shares in the second quarter.

All said, Buffett loves Apple stock and the iPhone maker is the largest holding for Berkshire by a fairly big margin.

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