[Moo Brief] Apple dips 1% despite beating earnings: Still worth wagering on Apple intelligence next quarter?

Moomoo CA joined discussion · Aug 2 02:22

Hey, mooers! $Apple (AAPL.US)$ released its Q3 fiscal year results yesterday, beating earnings expectations. However, $Apple (AAPL.US)$ closed at $218.36 with a 1.68% drop on Aug 1, rising by 0.59% to $219.65 after-hour at 7:59 PM EDT.

🧐 What's behind the stock decline despite $Apple (AAPL.US)$ beating on earnings?

💭 Slowing iPhone sales？

$Apple (AAPL.US)$'s Q3 earnings beat analysts' expectations despite iPhone revenue falling 0.9% YoY to $39.3 billion (analysts expected $38.95 billion). Mac revenue grew 2.5% to $7.01 billion (analysts expected $6.98 billion), while iPad revenue surged 23.7% to $7.16 billion (analysts expected $6.63 billion). Wearable devices, home, and peripheral revenue fell 2.3% to $8.1 billion (analysts expected $7.79 billion), and service revenue increased 14% to $24.213 billion (above the market expectation of $23.96 billion).

[Moo Brief] Apple dips 1% despite beating earnings: Still worth wagering on Apple intelligence next quarter?

💭 Decreasing Great China sales？

Greater China's revenue was the only geographic region to decline year-on-year, and the decline was greater than expected. Greater China, which contributes about 20% of Apple's revenue, had revenue of $14.73 billion, down 6.5% YoY from $15.76 billion in the same period last year. Greater China is Apple's third largest sales market after North America and Europe. As a core business with sales far exceeding other hardware products, the health of the iPhone, especially the sales trend in Greater China, will be particularly noteworthy.

⚠️But wait!

Q3 earnings did not reflect the sales of coming Apple Intelligence. Going forward, Will Apple Intelligence drive the growth of $Apple (AAPL.US)$?

Despite the slowing iPhone sales, the market generally believes that new AI features will become the main driving force for the "super cycle" of $Apple (AAPL.US)$'s hardware product upgrades, led by the iPhone. There is still confidence in the Chinese market in the long run due to Apple Intelligence. Despite the development of AI, $Apple (AAPL.US)$'s Q3 gross profit margin was 46.3%, higher than the market expectation of 46.1%. Company executives said that the total revenue growth rate in the fourth quarter will be similar to that in the third quarter, and service revenue is expected to record a double-digit percentage growth.

🌠Apple Intelligence leads the way

Apple Intelligence is expected to drive a new round of phone replacement.

Apple Intelligence has three major features: system-level AI, cross-application information integration capabilities, and deployment in a terminal-cloud and private-cloud manner:

⓵ System-level AI is integrated into its operating system, allowing for direct calls to AI capabilities in applications and improving efficiency through a smarter Siri.

⓶ Cross-application information integration capabilities sort and extract information from various applications, allowing Apple Intelligence to discover and understand information between applications and providing cross-application information processing capabilities. This is due to $Apple (AAPL.US)$'s integrated advantages in operating system + model + chip + terminal.

⓷ Built-in large models have achieved better performance in user experience, text processing, and security, providing powerful capabilities in language, images, personal context, etc. through modeling processes such as pre-training, post-training, optimization, and fine-tuning.

Drop your answer and get points!

To get back on track, do you believe in Apple Intelligence? Would you still invest in $Apple (AAPL.US)$?

Please drop your answer with reasonable comments, and you will receive 66 points.

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102362254 : Yes. Apple Intelligence is an exciting development, showing Apple's commitment to innovation and enhancing user experience. Given their track record and the potential of these new AI features, I believe investing in Apple remains a smart choice.

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mr_cashcow : Yes, apple fans are all eagerly waiting for new iPhone models to drop so that they can get their hands on it

Everyone wants the next new thing it is just basic human nature

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Connie C : why not，it's still a good fundamental company.

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Ricky178 : yes. apple fan will change apple ai phone.

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