Apple Earnings Preview: Still the Anti-AI Trade?

Tonight's consensus points to the slowest revenue growth in four quarters, with iPhone sales seen up about 15% to roughly $56.5 billion and Services up almost 10% to around $31.6 billion. A beat isn't always enough, though: after July's results, the shares fell as much as 10% to $300 before closing down 7.4%, as guidance for 9% to 11% growth flagged supply and currency constraints. 

iPhone Duo: Strong Demand, Teething Problems 

Apple's first foldable has drawn long waiting lists, but the launch hasn't been smooth. 

The iPhone Duo opened for pre-orders on 16 October and went on sale a week later, so it won't feature in tonight's numbers but will shape December-quarter guidance. Longer wait times point to strong demand, and Apple's main assembler has said it is confident of meeting the surge, according to Bloomberg News. 

Against that, some buyers have reported cracked screens and hinge issues shortly after purchase, and many apps aren't yet optimised for the folding display. That's an unusual look for a company known for waiting until a product is close to perfect, and it comes alongside the first touchscreen MacBooks and the new HomeView device. 

Memory Costs and Supply Risks 

The AI boom Apple has sidestepped is still affecting component supply and costs. 

Hyperscaler demand has sent memory and flash storage prices soaring, eroding the leverage Apple used to have over chip suppliers. Apple has raised prices across much of its line-up in response, including $100 increases on some iPhone models, which puts the focus on whether customers keep upgrading at the usual pace. 

Gross margin is expected to come in between 47% and 48%, down from about 50% in the June quarter. Any comment on component availability will matter too, since supply limits were one of the reasons July's guidance disappointed. 

First Call for John Ternus 

Tonight is Ternus's first earnings call since he succeeded Tim Cook as CEO at the start of September. 

The former head of hardware engineering has already sped up the pace of launches and recently defended Apple's measured approach to AI. "We don't want to ship AI for AI's sake," he told WIRED, adding that "when we're doing it right, people won't have to think about whether it was AI that made this happen." It is also Apple's first Monday earnings release since 2015. 

Apple Technical Analysis 

Apple's uptrend is intact, but momentum has been fading with each new high. 

The stock is trading above its 20, 50, 100 and 200-day moving averages, which are stacked in bullish order, and last month it broke above September's $345.34 peak to set a record of $351.73 on 23 October.  

However, the 14-day RSI has made a series of lower highs, from around 69 in late July to 67 in late September and 65 at the October peak, a bearish divergence that suggests buying pressure is weakening. 

A move back below the breakout zone around $345 and the 20-day average near $342 would put the 50-day average at about $333 and the 1 October low of $325.81 in focus. A strong reaction to the results that clears $351.73 would ease divergence concerns and point to further gains. 

Source: SpreadEx | Apple, Daily Chart