TJ
Stock/Options Trader, Volume at Support/Resistance, Publisher of Volume Stocks Newsletter
Apple was hard to own into earnings, and guidance came in softer than expected. Services guidance was $30.74B versus $31.22B expected, and China $18.8B versus $19.6B. Memory and storage chip prices have quadrupled on AI demand, raising margin fears and pushing Apple to lift Mac and iPad prices up to 25%, with bigger iPhone hikes expected. Shares had surged into the print, so even a beat was priced in, and Siri AI underwhelms. Apple has mostly been rising on fluff news. x.com x.comÂ
Apple's weak Mac and iPhone demand and soaring costs threaten worse Q3 results and Q4 guidance than its weak Q2. IDC estimates Mac sales fell 11% y/y in Q3 after rising 13% in Q2. Counterpoint says Pro sales rose just 3% in the first three weeks while overall iPhone sales fell; lower-end models are absent this year. Foldable yields are reportedly 60%, and $100 price hikes may not offset costs. At $5 trillion, 39 P/E and 11 times sales, Apple's crowded 'safe haven' looks vulnerable. x.comÂ
Memory-cost pressure, weak volumes and weak services should make Apple's quarter bad, giving the short a chance to work on this quarter alone. Other hardware companies this quarter also point to weakness, though Apple has been a terrible short so far. x.com x.comÂ
Apple's balance sheet and lack of spend keep a bid under its stock whether the market rises or falls. That bid gets stronger with foldable phones that break. x.comÂ
Apple's roughly 40 times trailing and 37 times forward earnings make the shares too expensive ahead of next week's results. A short looks reasonable, though a sell-the-news reaction after earnings remains uncertain. x.com x.comÂ
Apple's growth valuation gives too much credit to a $2,000 folding iPhone and a touchscreen MacBook. Its 36.16 forward P/E and 3.54 PEG are higher than recent readings over the past two years, making this a point to take serious profits. x.comÂ
Apple's sweeping price increases deliver the revenue-growth bull case. It is raising prices on current and even years-old products, refurbished units included, such as a 30% bump on the 2019 HomePod mini, and the iPhone 18 looks set for a $200+ increase. How demand responds is uncertain: people may keep devices longer, and if volumes nosedive Apple will likely add some forced obsolescence. x.com x.com x.com x.com x.com x.com x.comÂ
Apple's roughly 35x forward earnings premium looks unsustainable. If fear around the AI trade fades, its gains could stall or reverse. x.com x.comÂ
Apple stock remains unattractive as memory costs threaten demand and supply. Nikkei reports memory-driven iPhone price hikes dampened demand, with October Pro and Pro Max component orders cut at least 15%; Chinese media instead cite a slight Pro dip and Pro Max rise. Apple may still lack long-term memory supply deals, according to market chatter; Korean analysts expect sharp NAND and DRAM price hikes for Apple early next year. x.com x.com x.com x.comÂ
Apple's quarter was a clean beat with broad strength, and it should read as bullish unless management's call walks down June-quarter expectations. iPhone grew 22%, Services 16% and China 28%, gross margin reached 49.3%, and Apple announced a $100B buyback. x.comÂ
Apple costs 35 times earnings and 10 times sales, multiples whose arithmetic buyers should question. x.comÂ
