Apple Stock Jumps 6% After Results Beat Estimates, Company Reveals $110 Billion Buyback

Apple (AAPL) shares rose as much as 6% early Friday after the tech giant reported earnings that beat forecasts, sales that fell less than feared and announced a new stock buyback plan worth 110,000 millions of dollars.

The iPhone maker late Thursday reported second-quarter earnings per share (EPS) of $1.53 and revenue of $90.8 billion. Wall Street expected earnings per share of $1.50 on revenue of $90.3 billion, according to analyst estimates compiled by Bloomberg.

Apple’s revenue in Greater China, which includes mainland China, Taiwan, Singapore and Hong Kong, fell 8% year over year to $16.37 billion. That, however, was better than the $15.87 billion analysts were expecting. Apple CFO Luca Maestri told Yahoo Finance’s Josh Lipton that the company saw growth in mainland China during the quarter.

The company’s all-important iPhone revenue totaled $45.96 billion, up from $51.33 billion in the second quarter of last year. Apple also announced it was authorizing an additional $110 billion in share buybacks and increased its dividend to $0.25 per share. Shareholder return plans have become a feature of Big Tech’s results this year: Meta started a dividend in February and Alphabet announced its own plans to start paying a dividend late last month.

Before Thursday’s report, Apple shares had fallen 10% this year, lagging many of its Big Tech peers and the broader market.

In its fiscal second quarter, Mac revenue rose to $7.45 billion versus a forecast of $6.79 billion, while iPad revenue hit $5.55 billion. Analysts expected $5.91 billion. Wearables, including AirPods, Apple Watch and Vision Pro, posted revenue of $7.91 billion. Wall Street was seeking $8.28 billion.

Another bright spot for Apple in the quarter: Services revenue hit $23.87 billion, up from $20.91 billion last year, an all-time high. Analysts expected $23.28 billion.

In its earnings call, Apple also said it expects current quarter revenue growth to be in the single digits. Service revenue is expected to grow in double digits and at a similar pace to what the company saw in the first half of its fiscal year.

JPMorgan analysts led by Samik Chatterjee wrote in a client note late Thursday that these results are “establishing a strong launching pad for the company relative to its FY24 results, as attention turns to focuses on the impending refresh cycle of AI smartphones in the coming years.” Following the results, JPMorgan maintained its Overweight rating on the stock and raised its price target to $225 per share from $210.

Apple is also preparing for its Worldwide Developers Conference (WWDC) in June, where it will reportedly unveil the latest versions of its iOS, macOS, watchOS, iPadOS, and visionOS operating systems. One of the biggest announcements at the show will likely be how Apple will integrate generative AI into its various products.

On the company’s earnings conference call, CEO Tim Cook said, “We believe we have advantages that will differentiate us in this new era.”

In a note to clients following the report, Evercore ISI analysts led by Amit Daryanani wrote: “We believe a set of positive catalysts should help push the stock higher as we head into WWDC, where AAPL will provide details on its AI strategy in hardware and “We believe Apple can deliver advantages in AI without the AI ​​capex we see elsewhere.” Evercore maintained its Outperform rating and $220 price target for the stock.

Apple may be relatively late to the generative AI party, as its Big Tech rivals are already rolling out their own product offerings to consumers and enterprise customers. Still, the company has been busy buying AI companies and building its own large language model to potentially boost its AI efforts.

And Maestri told Yahoo Finance that the company is making significant investments in generative AI technologies. Apple is also looking to work with OpenAI, Google and others to fine-tune its AI offerings, according to Bloomberg’s Mark Gurman.

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Email Daniel Howley at [email protected]. Follow him on Twitter at @DanielHowley.

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