Apple shares rose 3.6% in early trading on Friday (1st), after the iPhone maker recorded its biggest quarterly sales growth in more than four years, demonstrating the company’s good momentum as it prepares for the transition to a new CEO.
The new iPhone 17 Pro line and the recently launched MacBook Neo, a low-cost notebook, are attracting buyers at a time of low overall demand in the consumer electronics sector due to price increases caused by a shortage of memory chips.
While Apple’s margins for the January-March quarter and forecast for the fiscal third quarter have , outgoing CEO Tim Cook warned that rising memory costs will increasingly impact the business starting in June.
The limited supply of advanced processors for the iPhone has already hampered Apple’s ability to capitalize on strong demand. The chips are manufactured by TSMC, from Taiwan, a leader in the production of artificial intelligence processors.
Analysts say Apple’s influence with its longtime suppliers could position it better than its competitors in procuring memory chips, but that it may need to raise prices later this year.
“The crucial question will be finding the perfect strategic balance between increasing prices and maintaining profitability, or focusing on gaining market share without increasing prices,” said Nabila Popal, senior director of research at IDC.
“I believe Apple will increase the prices of the Pro and Pro Max when it launches in the fall, but even if it doesn’t, the launch of the ultra-high-end foldable iPhone — which we expect to cost well over $2,200 — will help offset some of the increased costs.”
At least 13 brokerages raised their price targets on Apple shares following the earnings release. If the gains hold, Apple is on track to add about $143 billion to its market value, currently at $3.983 trillion.
“Apple is on track to add about $143 billion to its market value, which currently stands at $3.983 trillion.”
Good omen for new CEO
The results, including forecast sales growth of 14% to 17% for the current quarter, above estimates, bode well for the company before , head of the hardware division, takes over as CEO in September.
Cook will remain executive chairman of the board.
The move comes as Apple seeks to close the gap with rivals Microsoft and Alphabet, which have moved faster in implementing .
Investors are expected to get more details about its AI plans at the annual software developers conference in June.
Some analysts stated that Apple’s decision to no longer seek to achieve financial balance (cash minus debt) could help it better manage its financial situation in the age of AI.
The move provides greater balance sheet flexibility, allowing it to absorb higher costs, support share buybacks and allocate capital more strategically, TD Cowen analysts said.
