Here's Our Plan for Apple as Shares Fall Ahead of Earnings
As one of the S&P 500's largest members falls on the first day of the Trump term, this is the catalyst we're waiting for.
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Settling into the world occupied by the Trump White House, the stock market is moving higher as is the Portfolio, despite the fall in one of the S&P 500’s largest constituents – Apple AAPL.
That decline follows another data point from Counterpoint Research finding iPhone sales fell just over 18% in China during the December quarter. Coming off similar findings from Canalys last week, we’d argue the findings from Counterpoint aren’t new. Rather than jump to a conclusion based solely on Apple’s performance in China, which we do find lacking, we’ll instead focus on data from IDC showing global iPhone shipments rose 33% sequentially in the final quarter of 2024. Factoring in the China decline, this suggests Apple picked up share in other markets, including the U.S., and we suspect CEO Tim Cook will make a note of pointing this out on Apple’s upcoming earnings call.
As it relates to the iPhone, our thinking continues to be that forthcoming updates to Apple’s software platforms will further improve Apple Intelligence, fostering a more extended iPhone upgrade cycle. We also have to acknowledge Apple’s growing and higher margin Services business and the $110 billion remaining under its current stock repurchase program as of September 28, 2024. Perusing the company’s filings with the SEC, we find the repurchase activity of the last few quarters has occurred at an average share price in the range of $221 to $224, which is a tad above where AAPL shares are currently trading.
When Apple reports its December quarter after the market close on January 30, we expect the market to focus on the outlook for its iPhone business. Ahead of that, Apple partner and RF semiconductor company Qorvo QRVO will report on January 28 and that will shape expectations for Apple’s iPhone guidance. Based on what we learn from Qorvo, we’ll plot our next move with AAPL shares. That could be to wait until Apple management serves up its outlook and use any meaningful pullback to pick up more shares at better prices than we are seeing now.
Qualcomm Gets a Nod
We’d also share that JPMorgan has slapped a “Positive Catalyst Watch” on Qualcomm QCOM shares, which it ties to a favorable outlook when Qualcomm reports on February 5.
We’ve already heard from Taiwan Semi TSM that it sees low single-digit volume growth for the smartphone and PC markets, and we continue to see Qualcomm benefitting from the uptake of AI PCs. Canalys sees AI PCs accounting for 35% of industry shipments this year while Counterpoint Research forecasts AI laptops will capture close to 60% of the laptop market this year, up from 25% in 2024. That’s a volume ramp we aim to benefit from by owning QCOM shares.
At the time of publication, TheStreet Pro Portfolio was long AAPL and QCOM.
