With Apple gearing up to announce its Q1 2024 earnings after the close of US markets on January 31, all eyes will be on the tech giant.
Despite an impressive 49% surge in Apple stock during 2023, outpacing the Nasdaq Composite's 44% returns, the company struggled to keep pace with other FAANG (Meta , Apple, Amazon, Netflix, and Alphabet) constituents, making it the weakest performer among the group. Furthermore, in 2024, Apple has faced challenges, trailing behind its FAANG peers and relinquishing its $3-trillion market cap to Microsoft (MSFT).
According to Nasdaq, consensus estimates indicate a modest rise of just under 1% in Apple's Q1 revenues, with a 3.4% increase expected for the full year. Despite this, analysts are optimistic about the tech giant's earnings per share, projecting an 11.1% rise in the fiscal first quarter.
Here are five key things to monitor:
1. Revenue growth outlook: In the 2023 fiscal, Apple experienced negative revenue growth for four consecutive quarters, a first since 2001. As the company faces challenges, analysts anticipate a modest under-1% increase in Q1 revenues. Investors will be closely monitoring Apple's commentary on the revenue outlook for any signs of a turnaround or continued headwinds.
2. Chinese market dynamics: China stands as Apple's largest overseas market, yet the country's economic slowdown poses a significant risk. Amid tough competition from local players like Huawei and Xiaomi, Apple's comments on the Chinese market during the earnings call will be pivotal. Observers will be keenly assessing the company's strategy and resilience in this critical market.
3. Forward guidance amidst uncertainty: Apple discontinued providing quantitative forward guidance in 2020 due to the COVID-19 pandemic. However, the company offers directional insights for the next quarter. Investors will closely scrutinise these comments, seeking indications of a potential turnaround after disappointing topline declines in the previous fiscal year.
4. Vision Pro augmented reality headsets update: Apple's foray into augmented reality with the Vision Pro headset has garnered attention. As deliveries are set to commence, investors will be eager for any updates on the product's performance and its potential impact on Apple's future growth. The success of Vision Pro could offer a glimpse into Apple's ability to innovate beyond traditional product lines.
5. Analyst sentiment and stock forecast: January saw rare downgrades for Apple, with some analysts expressing caution about the company's stock performance. The prevailing sentiment among analysts remains cautiously optimistic, with a ‘Moderate Buy’ rating, as per Nasdaq. Investors will closely watch the stock forecast, considering factors such as potential soft guidance for the March quarter and overall market sentiment towards Apple compared to its FAANG peers.
As Apple aims to regain its $3-trillion market cap, these five key points will shape the narrative around the company's trajectory for 2024.
