The Apple (NASDAQ: AAPL) stock price has been under pressure in the past few weeks as investors worry about growth amid a tightening Federal Reserve. The stock is trading at $162, which is about 11% below its highest level this year, meaning that it has moved to a correction zone.
Apple earnings preview
Apple is the biggest company in the world, with a total market capitalization of over $2.65 trillion. At its peak in January, the firm was valued at $3 trillion, making it the first company to ever cross that milestone.
Analysts expect that the company did well in the fourth quarter as demand for its products rose and that it will show a strong annual performance when it publishes its annual report after the market closes on Thursday this week. More precisely, analysts expect that the company generated revenue of $118 billion in the fourth quarter. That will be a spectacular increase from the $83 billion that it generated in the previous quarter. The company made $111 billion in the same quarter in 2020. Historically, the fourth quarter is the company’s strongest period because of the holiday season.
Apple’s profitability is also expected to have improved despite the ongoing cost challenges. Analysts expect that the firm’s earnings per share jumped to $1.89 from the previous $1.63.
What to watch in Apple’s release
Investors will focus on several areas. First, they will focus on the company’s iPhone revenue since most iPhone 13s were sold during the period. iPhone accounts for over 45% of the company’s total revenue.
Dan Ives, the closely-followed tech analyst from Wedbush expects that the company sold an excess of 40 million iPhones in the fourth quarter. Most of this growth will be from China, where Apple is viewed as a high premium brand.
Second, investors will pay close attention to the fast-growing services segment, which includes products like Apple Music, iCloud, and Apple News+. The segment has grown rapidly, and Ives believes that it is now generating over $75 billion. He values it at about $1.5 billion.
Third, analysts will focus on the company’s cost structure. This week, companies like IBM and Microsoft have all talked about the impact of high wages on their businesses. Most importantly, investors will focus on the chip shortage that has affected most companies in the tech industry.
Is Apple a good investment?
The Apple stock price has had spectacular growth over the years. Original holders have seen the shares jump by more than 38,000% since its Initial Public Offering (IPO) in the 1980s.
The company is playing an important role in the market because it sits at the intersection of growth and value. It is a value company that has steady revenue growth and is highly profitable. Some of its segments, such as services, are growing at double-digits.
Most importantly, Apple has other benefits. For example, it is now designing its chips, meaning that it can build better-performing devices.
Apple stock price forecast
The daily chart shows that the AAPL stock price has been in a strong bullish trend in the past few months. While the stock has retreated recently, it remains above the 100-day moving average and the ascending trendline shown in green. Also, this is not the first time that Apple has had double-digit declines in the past 12 months. Therefore, there is a likelihood that the Apple stock price will keep rising as bulls target the next key resistance at $200.
