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Will Apple (AAPL) Stock Rebound Post WWDC22 Announcements?
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Apple’s (AAPL - Free Report) latest announcements at this year’s Worldwide Developer’s Conference (WWDC) — iOS16, macOS Ventura, iPadOS 16, watchOS 9 and two Macbooks supported by new M2 chip — are likely to provide some relief to the battered stock.
Apple has been struggling so far in 2022 primarily due to coronavirus-induced supply-chain disruptions, industry-wide silicon shortage, unfavorable forex and the ongoing Russia-Ukraine conflict.
Shares of the iPhone-maker have been down 16.3% year to date although it has managed to outperform the Zacks Computer & Technology sector’s decline of 24.5%.
The near-term outlook is not enthusiastic, given the headwinds. Apple did not provide revenue guidance for the third quarter of fiscal 2022. Apple expects COVID-induced supply chain disruptions and the industry-wide silicon shortage to hurt the top line by $4-$8 billion. Unfavorable forex is also expected to hurt revenues by 300 basis points (bps).
Moreover, the absence of Russian revenues will hurt the top line by 150 bps. Apple paused all sales in Russia during the fiscal second quarter (March quarter).
WWDC22 Announcements – Brief Overview
Apple’s WWDC22 witnessed the unveiling of usual upgrades to all of its operating systems.
The upcoming iOS 16 allows iPhone users to personalize their lock screens by using photos, emojis and favorite color combinations, along with customized widgets. Apple has redesigned notifications to roll up from the bottom. iOS16 offers Live Activities — a new feature that will notify users about events that are happening in real time right from the lock screen.
Apple unveiled macOS Ventura, which features Stage Manager. This enables Mac users to stay focused on the task in front of them while smoothly navigating between apps and windows. Handoff will now be available for FaceTime, allowing users to start a FaceTime call on their iPhone or iPad and seamlessly pass it over to their Mac. Apple also upgraded the security of Safari with the addition of passkeys, which are unique digital keys that stay on devices and are never stored on a web server. This reduces chances of hacking.
Apple previewed iPadOS 16 also offers Stage Manager feature, which helps in creating a personalized workspace and seamlessly moving between multiple overlapping apps. Per Apple, “New pro features — including Reference Mode and Display Zoom — make iPad an even more powerful mobile studio.”
watchOS9 will offer more customizable watch faces, an enhanced workout app, sleep stages and an all-new medications app. It will also offer a new FDA-cleared AFib History feature that provides deeper insights into a user’s medical conditions.
In terms of hardware, Apple unveiled a completely redesigned MacBook Air and an updated 13-inch MacBook Pro, both powered by the new M2 chip.
The M2 chip, built using second-generation five-nanometer technology, offers an 18% faster CPU, a 35% more powerful GPU and a 40% faster Neural Engine (compared with M1). It also delivers 50% more memory bandwidth compared to M1 and up to 24GB of fast, unified memory.
Strong Demand for Devices & Services to Aid Top Line
Undoubtedly, the new features announced in WWDC 2022 will boost demand Apple’s devices including iPhone, iPad, Mac and Watch.
The new M2-chips are expected to boost demand for new MacBook Air and MacBook Pro, thereby improving Apple’s competitive position against the likes of Lenovo, Dell Technologies (DELL - Free Report) and HP (HPQ - Free Report) .
Per Gartner, worldwide PC shipments in the first quarter of 2022 witnessed a year-over-year decrease of 6.8%, reaching 77.9 million units. Both Lenovo and HP witnessed decline in market share, while Dell and Apple’s shares gained.
Dell, Apple and ASUS were the only vendors that witnessed shipment growth. Dell shipped 13.804 million units, witnessing 6.1% year-over-year growth in the first quarter of 2022, per the Gartner report.
Apple shipped 7.005 million units, witnessing 8.6% year-over-year growth. HP shipped 15.863 million units, down 17.8% year over year.
Moreover, the new watchOS9 updates will strengthen Apple Watch’s features, helping it steer off competition from the likes of Garmin (GRMN - Free Report) , which has been constantly innovating in this domain.
Garmin recently unveiled a running smartwatch called the Forerunner 955 Solar with solar charging capability. The latest device expands Garmin’s portfolio of fitness offerings, adding strength to the fitness segment.
Meanwhile, the Services portfolio has emerged as Apple’s new cash cow. This Zacks Rank #3 (Hold) company had more than 825 million paid subscribers across its Services portfolio at the end of fiscal second quarter. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Growing adoption of services like Apple TV+, Apple Arcade, Apple News+, Apple Card and Apple Fitness+ drives Services' revenue growth, which is expected to be in strong double digits for the June quarter.
In the second quarter of fiscal 2022, Apple’s Services revenues grew 17.3% from the year-ago quarter to $19.82 billion and accounted for 20.4% of sales.
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Will Apple (AAPL) Stock Rebound Post WWDC22 Announcements?
Apple’s (AAPL - Free Report) latest announcements at this year’s Worldwide Developer’s Conference (WWDC) — iOS16, macOS Ventura, iPadOS 16, watchOS 9 and two Macbooks supported by new M2 chip — are likely to provide some relief to the battered stock.
Apple has been struggling so far in 2022 primarily due to coronavirus-induced supply-chain disruptions, industry-wide silicon shortage, unfavorable forex and the ongoing Russia-Ukraine conflict.
Shares of the iPhone-maker have been down 16.3% year to date although it has managed to outperform the Zacks Computer & Technology sector’s decline of 24.5%.
The near-term outlook is not enthusiastic, given the headwinds. Apple did not provide revenue guidance for the third quarter of fiscal 2022. Apple expects COVID-induced supply chain disruptions and the industry-wide silicon shortage to hurt the top line by $4-$8 billion. Unfavorable forex is also expected to hurt revenues by 300 basis points (bps).
Apple Inc. Price and Consensus
Apple Inc. price-consensus-chart | Apple Inc. Quote
Moreover, the absence of Russian revenues will hurt the top line by 150 bps. Apple paused all sales in Russia during the fiscal second quarter (March quarter).
WWDC22 Announcements – Brief Overview
Apple’s WWDC22 witnessed the unveiling of usual upgrades to all of its operating systems.
The upcoming iOS 16 allows iPhone users to personalize their lock screens by using photos, emojis and favorite color combinations, along with customized widgets. Apple has redesigned notifications to roll up from the bottom. iOS16 offers Live Activities — a new feature that will notify users about events that are happening in real time right from the lock screen.
Apple unveiled macOS Ventura, which features Stage Manager. This enables Mac users to stay focused on the task in front of them while smoothly navigating between apps and windows. Handoff will now be available for FaceTime, allowing users to start a FaceTime call on their iPhone or iPad and seamlessly pass it over to their Mac. Apple also upgraded the security of Safari with the addition of passkeys, which are unique digital keys that stay on devices and are never stored on a web server. This reduces chances of hacking.
Apple previewed iPadOS 16 also offers Stage Manager feature, which helps in creating a personalized workspace and seamlessly moving between multiple overlapping apps. Per Apple, “New pro features — including Reference Mode and Display Zoom — make iPad an even more powerful mobile studio.”
watchOS9 will offer more customizable watch faces, an enhanced workout app, sleep stages and an all-new medications app. It will also offer a new FDA-cleared AFib History feature that provides deeper insights into a user’s medical conditions.
In terms of hardware, Apple unveiled a completely redesigned MacBook Air and an updated 13-inch MacBook Pro, both powered by the new M2 chip.
The M2 chip, built using second-generation five-nanometer technology, offers an 18% faster CPU, a 35% more powerful GPU and a 40% faster Neural Engine (compared with M1). It also delivers 50% more memory bandwidth compared to M1 and up to 24GB of fast, unified memory.
Strong Demand for Devices & Services to Aid Top Line
Undoubtedly, the new features announced in WWDC 2022 will boost demand Apple’s devices including iPhone, iPad, Mac and Watch.
The new M2-chips are expected to boost demand for new MacBook Air and MacBook Pro, thereby improving Apple’s competitive position against the likes of Lenovo, Dell Technologies (DELL - Free Report) and HP (HPQ - Free Report) .
Per Gartner, worldwide PC shipments in the first quarter of 2022 witnessed a year-over-year decrease of 6.8%, reaching 77.9 million units. Both Lenovo and HP witnessed decline in market share, while Dell and Apple’s shares gained.
Dell, Apple and ASUS were the only vendors that witnessed shipment growth. Dell shipped 13.804 million units, witnessing 6.1% year-over-year growth in the first quarter of 2022, per the Gartner report.
Apple shipped 7.005 million units, witnessing 8.6% year-over-year growth. HP shipped 15.863 million units, down 17.8% year over year.
Moreover, the new watchOS9 updates will strengthen Apple Watch’s features, helping it steer off competition from the likes of Garmin (GRMN - Free Report) , which has been constantly innovating in this domain.
Garmin recently unveiled a running smartwatch called the Forerunner 955 Solar with solar charging capability. The latest device expands Garmin’s portfolio of fitness offerings, adding strength to the fitness segment.
Meanwhile, the Services portfolio has emerged as Apple’s new cash cow. This Zacks Rank #3 (Hold) company had more than 825 million paid subscribers across its Services portfolio at the end of fiscal second quarter. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Growing adoption of services like Apple TV+, Apple Arcade, Apple News+, Apple Card and Apple Fitness+ drives Services' revenue growth, which is expected to be in strong double digits for the June quarter.
In the second quarter of fiscal 2022, Apple’s Services revenues grew 17.3% from the year-ago quarter to $19.82 billion and accounted for 20.4% of sales.