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Apple Q2 Earnings Preview: China Sales

Apple is set to reveal its second fiscal quarter earnings after the market closes on Thursday
May 3, 2024

Apple is set to announce its earnings for the second fiscal quarter on Thursday after the markets close. Analysts' expectations are mixed, with some anticipating weak sales growth. Here's a breakdown of what to expect from Apple's upcoming earnings report.

Investors have mixed expectations for Apple's second-quarter earnings. Despite a forecasted flat growth in iPhone sales and an anticipated $90.01 billion in revenue, some worry that Apple may underperform its peers and the broader market. The company's shares have already dipped around 10% this year.

Analysts expect Apple to report earnings per share of $1.50 and revenue of $90.01 billion for the quarter. Here's how Apple's business units are expected to perform:

- iPhone revenue: $46.00 billion

- Mac revenue: $6.86 billion

- iPad revenue: $5.91 billion

- Wearables, home, and accessories revenue: $8.08 billion

- Services revenue: $23.27 billion

Analysts also anticipate Apple providing a forecast for the current quarter, projecting approximately $83.23 billion in sales, representing a 1.8% annual growth.

However, the most significant concern among investors is the performance of Apple's third-largest market: China. In the previous quarter, sales in Greater China dropped by 13%, raising concerns about the company's position in this crucial market.

Analysts expect a further decline, with regional sales in China estimated at $15.25 billion, marking a 14% year-over-year decrease. This downward trend suggests deteriorating conditions in China, a market where Apple manufactures the majority of its products.

Increased competition from local companies like Huawei, despite U.S. export controls on advanced chips, adds to Apple's challenges in China. Analysts remain divided on the long-term impact of these challenges, with some viewing the current weak cycle as more cyclical than structural.

Despite the challenges, analysts are cautiously optimistic about Apple's future performance. Third-party data on iPhone sales in China indicates a potential improvement in demand, though recent statistics show a decline in shipments.

As Apple prepares to announce its second-quarter earnings, investors will closely watch for guidance on the current quarter and updates on the company's capital return plans. While expectations for the quarter are muted, Apple's outlook for the future may have a more significant impact on investor sentiment than its March quarter results.

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