Earnings

Gene Munster Observes Apple’s Q1 Results: A Better Perspective on the Mess

Published January 31, 2025

Apple Inc. (NASDAQ:AAPL) recently reported its fiscal first-quarter results, which turned out to be better than analysts had anticipated. Gene Munster from Deepwater Asset Management weighed in on the results, suggesting that the period was not as disappointing as the initial data might suggest. He attributed this perspective to channel inventory adjustments and optimistic forward guidance.

The Financial Performance: Apple’s revenue reached $124.3 billion, narrowly surpassing analyst predictions of $124.13 billion. Additionally, the company reported earnings per share of $2.40, which also exceeded the expected $2.36. However, there was a noted decline in iPhone sales in key markets such as China.

In a commentary shared on social media platform X, Munster highlighted that channel inventory adjustments played a significant role in the observed slowdown in sales. He emphasized, "The mess wasn’t as big as it looked in the numbers." Specifically, he pointed out that roughly half of the weakness in China, where revenue experienced an 11% drop, could be tied to issues with inventory management rather than reflecting fundamental demand problems.

Munster expressed confidence that iPhone sales could see a rebound starting in June, based on promising early uptake data from the U.S. market. This positivity was echoed by Apple’s CEO Tim Cook, who mentioned that the company's ecosystem and advancements with Apple silicon are unlocking new growth opportunities.

Apple’s installed base has reached an all-time high, with notable growth in its ecosystem contributing to the increased engagement among users. Services revenue was a standout, rising to $26.34 billion from $23.12 billion the previous year, illustrating a robust expansion within this segment.

Future Outlook: Despite existing challenges, particularly in China due to heightened competition and evolving consumer preferences, Munster remains optimistic about Apple’s forward guidance for the upcoming March quarter. He anticipates revenue growth of approximately 5%, which he sees as a positive signal given the previous period of inventory adjustments.

Stock Performance: Following the earnings report, Apple’s stock closed at $237.59, reflecting a decrease of 0.74% for the day. However, there was a bounce back in after-hours trading, where the stock price rose by 3.01%.

In conclusion, while Apple faced some headwinds, the overall financial results indicate that the situation may not be as dire as first thought. Munster’s insights suggest potential for recovery and growth moving forward, particularly with anticipated increases in iPhone sales.

Apple, Earnings, Stock