Apple Inc. is facing a critical quarter as it looks to break its streak of declining revenue. The company has experienced a decline in revenue for the past four quarters, and there are concerns about whether this trend will continue into the fifth quarter. However, analysts are cautiously optimistic, with the consensus view predicting positive growth for Apple in the holiday period.
The average forecast for Apple’s sales in the holiday period is $118 billion, a 0.7% increase from the previous year. While this indicates some growth, it is a close call for the company. The December quarter brought challenges in consumer spending in China, as well as a temporary disruption to Apple Watch sales due to a patent dispute.
Analysts tracked by FactSet generally expect some form of revenue growth for Apple, but there are a few who predict a decline. This is significant because Apple has never experienced five consecutive quarters of year-over-year revenue declines since 1998.
The focus for Wall Street will be on the performance of Apple’s iPhone business, particularly in China. While concerns about iPhone sales in China have been present since Huawei’s resurgence, recent supply chain checks do not indicate any immediate production cuts for the December and March quarters. Apple’s market share may have slipped in China during the fourth quarter, but it still ended up being the top smartphone vendor for the year. However, there is a possibility that “patriotism sentiment” favoring Chinese brands could impact iPhone sales in the near term.
Some analysts see potential upside for Apple’s overall revenue in the December quarter, driven by an inventory build of iPhone units in China. However, this could create risks for the March quarter. Despite these uncertainties, there is hope that Apple can deliver modest upside to its results and forecasts, especially considering the pressure on its stock so far this year.
While iPhones will be the main focus on the earnings call, investors may also be interested in hearing about Apple’s newest device, the Vision Pro mixed-reality headset. However, it is unlikely that Apple will provide specific details about the device, as it tends to be reserved about numerical specifics for newer hardware like the Apple Watch and AirPods.
In conclusion, Apple Inc. is facing a critical quarter as it aims to break its streak of declining revenue. The company’s performance in the holiday period will be closely watched, particularly in terms of iPhone sales in China. While there are concerns and uncertainties, there is also hope for modest upside in Apple’s results and forecasts. Investors may also be curious about Apple’s newest device, the Vision Pro mixed-reality headset, although specific details may not be disclosed.
