Apple (AAPL +6.5%) witnessed a notable increase in its stock value following its second quarter earnings release. The company announced a modest uptick in EPS and revenue, alongside a substantial $110 billion increase in its share buyback program and a minor dividend hike. The most significant driver of the stock's rise appears to be the anticipation surrounding Apple's upcoming AI initiatives, which will be detailed at the WWDC event on June 10. Additionally, Apple teased an exciting product announcement scheduled for next week.
Despite a 4.3% year-over-year drop in total revenue to $90.75 billion, this decline is mainly attributed to last year's surge due to replenished iPhone inventories and high demand following COVID-related disruptions. Without these factors, Apple's revenue would have shown growth.
- iPhone: Revenue was in line with forecasts at $45.96 billion, down 10.5% year-over-year, primarily due to last year's high base. Adjusted for this, iPhone sales remained stable, with notable growth in Mainland China, where iPhone 15 and iPhone 15 Pro Max lead sales.
- Mac: Sales increased by 3.9% year-over-year to $7.45 billion, fueled by the successful launch of the new MacBook Air models with M3 chips, touted as the best consumer laptop for AI applications.
- iPad: Revenue decreased by 17% year-over-year to $5.56 billion, facing tough comparisons from the previous year's launches.
- Wearables: Experienced a 9.6% decline in revenue to $7.91 billion, while Services sector soared to a record $23.87 billion, up 14% year-over-year, driven by robust growth in paid subscriptions.
- For Q3, Apple anticipates revenue growth in the low single digits year-over-year, with expectations for double-digit growth in Services and iPad sectors.
Regarding AI, Apple has been less forthcoming with specifics compared to other tech giants, which has been a source of frustration for investors. However, the company expressed strong optimism about its generative AI prospects and confirmed significant investment in this area, with more details to be shared at the upcoming WWDC.
Overall, while the results were solid, they were not extraordinary, partly due to challenging year-over-year comparisons. The stock's rise is likely fueled by the combined excitement for the AI-focused WWDC, the forthcoming product launch, the enhanced buyback program, and the recent stock pullback from December highs.
