After the company released profits for the fourth quarter that were better than expected, Apple shares increased by more than 8% on Friday. The price increase increased Apple’s market value by $178 billion and contributed to the spectacular stock market comeback, with the Dow Jones, Nasdaq 100, and S&P 500 all rising more than 2% in afternoon transactions.
Given that all other mega-cap tech businesses this week severely disappointed investors following their various quarterly reports, the boost was greatly needed. Amazon and Meta both experienced steep declines of over 20%, while Alphabet and Microsoft suffered declines of around 10% each.
Revenues from subscription services like Apple TV+ and Apple Music, which generated sales of $19.19 billion in the quarter compared to projections of $19.97 billion, were the main source of disappointment in Apple’s earnings results.
Additionally, Apple CEO Tim Cook forewarned investors that the company would likely experience slower growth during the approaching Christmas period as a result of difficult comparisons to the prior quarter.
Even after a week of poor earnings from Apple’s mega-cap tech competitors, Wall Street is still optimistic about the company.
“Apple beat top and bottom, deliver results that gave investors confidence that the world has not changed completely for tech,” investment manager Louis Navellier said in a Friday note.
And according to Wedbush analyst Dan Ives, Apple will be able to overcome the setback in its services segment in the next quarters, particularly if the US dollar’s current rally comes to an end.
“Services was a bit weak on currency, App Store softness, and the overall macro but should reaccelerate (ex currency) into the December/March quarters which is key for this core revenue stream that should approach $90 billion in annual revenue by 2024,” Ives said.
“Given the perfect storm of currency/macro this quarter, we would characterize Apple’s results and commentary around the December quarter as net bullish around underlying demand and help throw out the noise that iPhone 14 upgrades are slowing in this cycle. The Pro mix which we view as roughly 80% is an uplift for average selling prices and [a] key positive dynamic heading into FY23,” Ives said.
In order to reflect a reduced valuation multiple, Ives decreased his price target for Apple from $220 to $200 while maintaining a “Outperform” rating for the company.
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