What analysts are telling us while Apple’s stock falls after earnings report
Summary
Apple shares dropped four and a half percent in premarket trading following the release of the company's latest earnings report. Market analysts noted that investors felt let down by the projected gross margins and a deceleration in the growth of services revenue.
Shares in Apple declined nearly 2% on Tuesday after investors were left feeling disappointed about the company’s gross margin outlook and slowing services revenue growth.
Our Take
Apple beat on revenue ($114.5B) and EPS ($2.10), but the market is trading the guide, not the print. A December-quarter gross margin forecast of 45%–46%, down from 47.9%, shows that memory chip inflation is now hitting even the strongest pricing machine in hardware, and management expects those costs to keep rising past December. Add the expense of the Siri AI ramp and slower Services growth, and a premium multiple of roughly 35x forward earnings (vs. about 18x for Alphabet and 23x for Microsoft) gets harder to defend. The timing hurts too: the Nasdaq-100 closed Monday in correction territory, so Apple weakness can drag on the whole index. For traders, the key is whether AAPL holds the premarket low area near $322–$323 after the open. A break below opens room for more downside; a push back toward Monday's close near $339 would signal the dip is being bought. Memory names like Micron could keep benefiting from the same trend that is squeezing Apple.
Opinion of Tech & Money Press. Not financial advice.
Source: Read the full story at MarketWatch.com - Top Stories