Your future investment plan. You can always make future investments into Apple or any other stock over time; there's no need to invest all of your available capital at once. See our general guide on how to buy stocks for additional details on making stock purchases, including a full breakdown of various order types. View our list of the best brokers for stock trading. Disclosure: The author held no positions in the aforementioned securities at the original time of publication.
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To find out more, click below. This new app is changing how people invest in Follow investors, discover companies, with any amount of money. Daily Money. Every day we publish the latest news, stories, and content on the financial topics that matter. Our revenue estimates are in line with consensus estimates, while our EPS estimate is slightly below the consensus.
That said, we expect revenues to still see a solid year-over-year increase, driven by strong sales of the iPhone 12, higher demand for iPads and Macs as the remote learning and working trend persists, and continued growth in the services segment. See our interactive dashboard analysis on Apple Pre-Earnings for more details. The underperformance comes as investors rotated out of pandemic winners such as tech and work from home stocks, to more cyclical and value stocks to play the re-opening.
However, if Apple manages to post a reasonably strong earnings beat in Q4, we could see the stock move higher from current levels. We think the semiconductor shortage is only likely to have a transitory impact on Apple, and believe that the company should see further upside from its iPhone franchise, with upgraded models around the corner and also from its fast-growing and highly lucrative services business.
Apple also appears to be getting more Android customers to migrate to its ecosystem, noting that it saw strong double-digit growth in the number of people who switched in Q3.
This is significantly positive, as Apple has done a good job locking in users and better monetizing them with pricier upgrades, new products, and services. Our revenue estimates are slightly below consensus while our EPS estimate is in line with consensus. Revenues should see a nice bump year-over-year, driven by strong sales of the iPhone 12, higher demand for iPads and Macs as the remote learning and working trend persists, and continued growth in the services segment.
However, Apple typically sees a seasonal decline in sales in Q3 and the company has noted that the drop this quarter could be a bit steeper, due to supply chain-related issues and the slightly delayed launch of the flagship iPhones. The underperformance comes as investors rotated out of pandemic winners such as tech stocks, to more cyclical and value stocks to play the re-opening.
Apple, which trades at almost 30x forward earnings, which is above historical levels, has been impacted to a certain extent. That said, if Apple manages to post a solid earnings beat in Q3, we could see the stock gain further. For example, Apple says that it has about million paid subscriptions on its platform now, marking an increase of million compared to last year. Recent reports suggest that Apple's iPhone 13 sales may be restrained by supply chain restrictions.
The iPhone maker may have to lose out on sales of up to 10 million units of the iPhone 13, as a worldwide semiconductor shortage could cripple its production lines. The smartphone behemoth was reportedly looking to manufacture 90 million iPhone units in , but third-party reports indicate that it could fall short of that mark. As it turns out, the chip shortage isn't expected to affect only iPhone production, but also to hinder the output of iPads and MacBooks. Not surprisingly, investor sentiment about Apple stock has turned negative, but one shouldn't forget the massive opportunity the company is sitting on.
Now, Apple hadn't issued official guidance when it released its fiscal third-quarter results in July, citing the uncertainty posed by the COVID outbreak, but it won't be surprising to see the company exceed the market's expectations.
The higher ASP, along with the fact that the company's services business is growing at a nice clip, should translate to a fatter margin profile. All of this indicates that Apple is on track to deliver a solid set of results. More importantly, the tech giant is likely to sustain the high levels of growth, as it is at the beginning of a major upgrade cycle.
Investors shouldn't worry much about the near-term problems that may hamper Apple's iPhone production, as the company has a lot of room for growth in the 5G smartphone era thanks to its huge base of users. The company launched its first 5G-enabled iPhone models just last year, which means that only a small fraction of its installed base is using 5G devices.
The iPhone 12 Apple's first 5G device clocked million shipments in April this year, indicating that there are millions of users still in an upgrade window.
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