Apple Poised to Submit Report Quarter as Buyers Search for Perception Into iPhone Demand

The outcomes are scheduled to be launched Thursday after markets shut in New York and as U.S. equities have taken a wild journey this week amid considerations about inflation and geopolitical dangers. Whereas Apple shares had been on a tear earlier this month, they’ve fallen 10% this yr to this point to $159.69 a share Wednesday.

Apple’s outcomes—and the market’s response—can be watched carefully by traders as a bellwether forward of different massive U.S. tech corporations posting quarterly outcomes, together with

Amazon.com Inc.,

Google-parent

Alphabet Inc.

and Fb-parent

Meta Platforms Inc.

These corporations report subsequent week.

In what could also be a preview of what’s to return,

Microsoft Corp.

on Tuesday reported sturdy revenue and gross sales outcomes that beat analyst expectations. However the firm’s inventory was nonetheless punished, with shares falling greater than 5% initially in after-hours buying and selling that night earlier than they rose greater than 2% on a rosy forecast. The dramatic swing underscores concern amongst traders fearful about tech titans’ development potential and valuations after two years of hovering to new heights.

Of biggest curiosity Thursday: iPhones. 12 months-over-year iPhone gross sales might have risen to $67.6 billion, a 3% achieve, through the fiscal first quarter that ran October by way of December, in line with the typical estimate from analysts surveyed by FactSet. Analysts venture iPhone income will rise lower than 1% this fiscal yr in contrast with the previous yr, when gross sales rose 39% and helped gasoline Apple’s biggest yr ever.

Even with a slowdown, the Cupertino, Calif., tech big might report a document $31.3 billion revenue, or $1.90 a share, for the necessary vacation interval, in line with analysts’ estimates.

That will exceed the corporate’s earlier best-ever quarter a yr earlier, when it earned $1.68 a share, fueled by the arrival of the 5G-cellular-capable iPhone 12 fashions and gross sales of iPad tablets and Mac computer systems to employees and college students in lockdown.

Early within the pandemic, Chief Govt

Tim Cook dinner,

a longtime logistics professional, largely navigated the corporate across the uneven waters of provide chain disruptions that had disrupted rivals. That means was examined when the severity of shortages lastly hit Apple final summer time—a sign that no firm might be spared from work stoppages, components shortages and labor prices.

Throughout the July-September quarter, Apple mentioned it misplaced out on $6 billion in gross sales due to provide constraints and predicted a bigger hit through the fiscal first quarter. In October, Apple executives additionally cautioned that whereas they anticipated general gross sales to rise through the quarter versus a yr in the past, the corporate’s iPad enterprise would fall due to provide limitations.

In whole, analysts count on fiscal first-quarter income to rise 6.7% to a document $119 billion. Gross sales of Macs might have risen 14%, whereas iPad income declined 2.89%, in line with analysts’ estimates.

Regardless of expectations that iPhone gross sales development will sluggish this yr, Apple shares had sailed larger in current weeks earlier than the current marketwide downturn. The corporate’s market valuation briefly surpassed $3 trillion on investor enthusiasm for brand new product traces past the iPhone. Many are betting Apple’s foray into extended-reality headsets, probably later this yr, will open new doorways for the corporate.

In current weeks, some traders and analysts have additionally expressed elevated optimism that Apple has discovered methods to spice up manufacturing to fulfill demand. “I count on the vacation quarter to beat estimates,” mentioned Daniel Morgan, a senior portfolio supervisor who focuses on know-how at Synovus Belief Co., which counts Apple amongst its largest holdings. “My largest cause for optimism surrounds the current studies popping out of the businesses within the Apple meals chain that provide components to fabricate the iPhone which have made upbeat forecasts recently.”

Nonetheless, Apple had acknowledged longer-than-desired wait instances for sure merchandise through the gift-giving quarter. Including one other wrinkle to the vacation season, the corporate curtailed in-store buying at a number of places all through December because the Covid-19 Omicron variant unfold. The corporate had aimed to return workplace employees to their desks in February however has since postponed such plans.

Apple usually faces scrutiny within the years after an enormous iPhone debut as analysts and traders ask what’s subsequent to juice gross sales. Pleasure forward of the iPhone 12 pushed Apple shares to new heights in anticipation that the latest iPhone would gasoline document gross sales.

Buyers’ instincts proved right. Even with Covid-related manufacturing delays, the introduction of the iPhone 12 in late 2020 helped gasoline nearly $100 billion in revenue in fiscal yr 2021.

Now traders and analysts debate whether or not the expansion can proceed. Analysts equivalent to

Tim Lengthy

at

Barclays

say this yr and subsequent might show tougher as evolutionary iPhone choices may result in clients holding on to their telephones longer. That’s just like what occurred with the iPhone 6s in fiscal yr 2016 and iPhone XS in fiscal yr 2019. “The iPhone 12 cycle was sturdy,” Mr. Lengthy informed traders in a word Monday. “We’ve got seen this pattern earlier than.”

Some stay bullish.

Dan Ives,

an analyst for Wedbush who has been supportive about Apple, reiterated that sentiment in a word this week, calling the inventory “a ‘security blanket’ tech identify on this market storm.”

“Whereas the availability chain points have curtailed some development for Apple on this huge product cycle enjoying out throughout its whole {hardware} ecosystem, we consider the pent-up demand story for Cupertino remains to be being underestimated by traders,” he wrote.

Write to Tim Higgins at Tim.Higgins@WSJ.com