Apple reported $109.42 billion in revenue for its fiscal third quarter, surpassing analyst expectations of $108.65 billion. However, the company's guidance for the upcoming quarter projected revenue growth of only 9% to 11%, falling short of the anticipated 12%. This prompted a nearly 8% decline in Apple shares post-report.
CFO Kevan Parekh highlighted supply constraints as a key factor limiting growth, particularly affecting iPhone revenues. Analysts expressed mixed views; while some, like David Vogt from UBS, anticipated profit-taking after a strong rally in Apple's stock, others noted the company's unique free cash flow position due to minimal AI-related capital expenditures.
Barclays analysts warned that Apple may not be as well-prepared for current supply chain challenges as in previous cycles, suggesting that component shortages are being prioritized for AI applications over Apple's products.
Various analysts adjusted their price targets for Apple, with JPMorgan lowering its target to $340, while Wells Fargo raised its target to $350, indicating a range-bound outlook as investors assess Apple's gross margin and pricing strategies for future iPhone models.
Overall, while Apple continues to show strong demand for its products, the combination of supply constraints, high memory costs, and a lack of a robust AI strategy raises concerns about its growth trajectory in the near term