Big Earnings Beat
Shares in US tech giant Apple have exploded to fresh all-time highs following a bumper Q2 earnings report. Apple stock is trading a further 2.5% higher pre-market on Tuesday as traders continue to digest the details of the earnings results.
Apple reported an EPS of $2.58 over the quarter, surpassing expectations of a $2.05 reading. Revenues jumped 11% year-on-year to $59.7 billion. Given expectations of a 2% drop to $52.6 billion, the revenues figure was impressive.
iPhone Sales increase Through Online Sales
Looking at the breakdown of the earnings report, growth in iPhone sales was particularly surprising. This is given that over the last quarter the overall US smartphone market shrunk by 25% However, given the uptick in online shopping, Apple has been able to benefit due to its strong e-commerce operations.
Commenting on the results, Apple CEO Tim Cook said:
“We’re conscious of the fact that these results stand in stark relief during a time of real economic adversity. We do not have a zero sum approach to prosperity and especially in times like this we’re focused on growing the pie, making sure our success isn’t just our success.”
Apple shares have now rallied over 30% on the year and look set to continue. This is despite calls from some major investment names, such as Goldman Sachs, who called the rally “unsustainable.”
Increased Offerings Drive Services Revenues Growth
The company has recently expanded its range of offerings through operations such as Apple TV and Apple News. Services revenues were higher by 15% year on year to $13.2 billion. The company announced that it has now met a target laid out in 2016 to double annual services revenue within four years.
While Apple did not offer any guidance for the coming quarter, the key areas to watch will be the launch of the next set of upgrades for the iPhone, due this year. We expect the Apple 12 to come with as many as four different size options. The company has also announced a four to one stock split to lower the entry price for new investors.
Apple Shares Break Fresh Ground
Apple is trading just a little lower than the recent all time highs, after finding resistance at the bull channel top. Price is extended here following the bullish gap in response to the earnings report. While some pull back is likely the focus remains on continued upside while price holds above the 398.75 level.
Below there, the next level to watch is the 372.28 level support.