Technologies

Apple may reveal its biggest quarter ever after iPhone 13, AirPods 3 and MacBook Pro launches

A pandemic, economic uncertainty and an international chip shortage apparently haven’t slowed the tech giant.

Ever since Apple‘s value blew past a trillion dollars a few years ago, analysts and tech industry experts alike have frequently wondered aloud, “How much larger can it get?”

We’ll get an answer Thursday, when Apple announces its fiscal first-quarter sales and tells us how many iPhones, Macs and other products it sold during the holiday shopping season. Apple has built a lot of its business around this period, timing product launches — like those of its well-reviewed iPhone 13, its revamped MacBook Pro laptops, its latest iPads, AirPods 3 and the Apple Watch Series 7 — to maximize sales as people hunt for gifts for family and friends. After the quarter’s December close, investors pushed Apple’s shares so high that the company’s value topped $3 trillion for the first time, despite ongoing supply shortages for chips and other technology.

On average, Wall Street analysts expect the quarter to deliver new all-time financial records of $1.88 per share in profit on $118.38 billion in revenue, according to surveys published by Yahoo Finance. Though that’s impressive, Apple isn’t expected to show as much growth as it did in the 2020 holiday shopping season. That’s when the iPhone 12, Apple’s first 5G-compatible device, helped push the company’s profit up 30%, while sales jumped more than 17%.

That wasn’t all, though. Apple has continuously said over the past year that its Mac computers and iPads were seeing record demand as well, in part thanks to the company’s highly anticipated new M1 “Apple Silicon” chips. That technology scored well among reviewers, including CNET’s, who ran tests that showed performance improvements and increased battery life. “It was zippy,” CNET’s Andrew Hoyle wrote of using the new MacBook Pro to process high-detail photos.

Now analysts are broadly expecting 2021’s holiday shopping season to mark another record for Apple.

“The performance seen by Apple in the quarter was despite an unprecedented chip shortage out of the Asia supply chain,” Wedbush analyst Daniel Ives wrote in a Monday message to investors. Despite Apple’s established position as one of the world’s most highly valued companies, Ives says he still expects to see Apple’s “renaissance of growth” continue and its shares “outperform.”

An Apple spokesman declined to comment ahead of the company’s earnings report.

Industry leader

No matter what Apple says in its financial report Thursday, the results will be seen as a bellwether across the tech industry, and potentially beyond. But that report may prove an outlier as other companies struggle with supply and worker shortages, disappointing already dour Wall Street investors worried by further inflation, COVID-19’s continued impact on the world, and saber rattling between Russia and the US over Ukraine.

“Given resilient iPhone and Mac demand, we see Apple as a high-quality ‘flight to safety’ name to own during market volatility,” Cowen analyst Krish Sankar wrote in a note to investors. He too labels Apple’s stock at “outperform.”

Apple has long operated one of the most successful supply chains, particularly as it navigated disruptions from the COVID-19 pandemic. Even so, Apple’s executives have said they believe the company has lost out on billions of dollars in sales due to silicon chip shortages and manufacturing problems amid seemingly ceaseless demand.

Rod Hall, an analyst at Goldman Sachs, said he’s “slightly cautious” about Apple’s prospects, considering tech’s continuing challenges with the global supply chain. In a note to investors, he warned that even though Apple may have been able to manage the chip shortages better than most, he’ll be closely listening to executives as they give commentary on a post-earnings conference call.

Apple has also largely escaped the scrutiny that tech giants like Alphabet (née Google) and Meta (née Facebook) have faced over how their respective advertising-heavy business models erode people’s privacy and trust in big tech.

Whatever Apple announces Thursday, it’ll come at a time when investors are questioning Big Tech’s future. Netflix shares have plunged more than 35% this year, driven in part by the company’s own predictions last week that it would add far fewer subscribers than expected in the first months of 2022. Electric-car giant Tesla’s stock, meanwhile, plummeted nearly 28% from $1,199.78 per share at the start of the year, driven in part by the company’s struggles to put out new cars.

It all comes down to the iPhone

The iPhone remains king at the Cupertino, California-based company, even as Apple fans and industry watchers dissect each of the company’s new product lines and business moves.

Last year, the iPhone represented 52% of the company’s $365 billion in revenue, a slight increase from the 50% it represented in 2020 and a slight decrease from the 54% in 2019. That’s part of Apple’s seemingly endless conundrum: Its position as one of the largest companies ever is tied to the iPhone’s success.

Apple has tried to build on that success, announcing ambitious services offerings, including the $5 per month Apple TV Plus, the $5 per month Apple Arcade and the $10 per month Apple Fitness Plus. Its other iPhone add-on-type products like the AirPods headphones and Apple Watch wearable have performed well too, analysts say.

Rumors suggest that Apple’s next big product launch will be a headset, potentially coming this year or next. Many tech executives believe that headsets from Apple, as well as those from Microsoft, Meta, Sony, Google and Magic Leap, could represent the next step in computing beyond the phone. And many companies have already begun preparing.

Over the past year, tech executives from game companies to social networking giants to, yes, even Apple have begun publicly discussing a new term for the types of experiences these headsets will make possible: the metaverse. That’s a catchall description of apps and experiences people can share in connected virtual worlds like a video game.

The metaverse “is an attempt to redefine our entire relationship with the internet, from virtual communities to ownership of digital content. It snakes into gaming, cryptocurrency, NFTs, teleconferencing software and 3D scanning. It’s… a lot,” CNET’s Scott Stein wrote about what he expects from the technology this year. “A year ago, nobody even talked about the idea of a metaverse. Now it’s spread across countless news stories.”

For Apple, though, the metaverse may represent more than the next step in computing: It may finally be the product to take the financial crown from the iPhone.

But don’t expect CEO Tim Cook to spill the beans about his plans while speaking with analysts on a conference call Thursday. Those reveals are typically reserved for Apple’s splashy events, whether in person or entirely virtual, as the events have been during the pandemic.

Instead, when analysts and investors wonder how much larger Apple will get, what they’ll mean is how many more iPhones can Apple sell, as well as maybe iPads, Macs, Apple Watches, AirPods and all sorts of other tech, including the company’s (in)famous $19 polishing cloth.

“We’d expect a bullish installed base update,” Morgan Stanley analyst Katy Huberty wrote in a message to investors, citing upbeat reports from Apple throughout the past year. Though she also rates Apple’s stock at “outperform,” she’ll be listening for any other signs of how the pandemic and supply chain are affecting the company.

Technologies

CNBC Daily Open: Nvidia carries world of AI on its shoulders

Investors wait for Nvidia to set the scene of the biggest market trend in a generation, as its earnings look set to determine the direction of the AI trade.

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Hello, this is Leonie Kidd coming to you from London.

Nvidia is carrying the weight of the AI world on its shoulders. But, with sky-high earnings expectations, can the group led by CEO Jensen Huang actually impress investors?

Read on.

What you need to know today

Nvidia will report earnings after the bell on Wall Street on Wednesday. The AI darling’s blockbuster performance over the last year has driven earnings forecasts higher, adding to the so-called “expectations premium” Nvidia now needs to surpass.

The Street is projecting an eye-watering set of second-quarter sales at over $92 billion, according to FactSet. Cantor Fitzgerald highlighted consensus third-quarter sales expectations of $103.7 billion in a Saturday report.

Over the last year, Nvidia has beaten expectations across all topline metrics, but shares have been sold down the following trading day, according to Bespoke Data.

Hyperscaling test

This quarter, there is one persistent concern among investors: Nvidia’s dependence on the hyperscalers. The company now reports earnings in a way that separates these hyperscalers into its AI cloud, industrial and enterprise pack. Investors have voiced worries about this concentrated dependence on Amazon

Nvidia fell 2.9% on Monday, dropping for a seventh straight day, the longest losing streak since 2022. Shares ended the day 2.2% higher on Tuesday.

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Crude in the red

Oil prices were sharply lower in early trade on Wednesday.

A combination of factors is playing into the session today. Iran and Oman are discussing a joint temporary shipping route through the Strait of Hormuz in an effort to increase traffic through the chokepoint.

This comes as the U.S. administration forges ahead with its plan to use economic sanctions to escalate its war with Tehran.

Meanwhile, U.S. President Donald Trump has submitted a proposed agreement with Saudi Arabia to develop civil nuclear energy. This accord has now been submitted to Congress. A U.S. official told MS NOW that this will only move forward if Saudi Arabia joins the Abraham Accords.

Retaliation time

Canada has outlined “dollar-for-dollar” retaliatory tariffs that it will impose on over $20 billion of U.S. goods, after trade talks broke down with the Trump administration.

The counter-tariffs range from 15% to 50% and target a wide array of Canadian imports from the U.S., including dairy, seafood, appliances, wood and paper products, and clothes.

Among the most significant are 50% tariffs on American steel and aluminum, doubling the current rate.

The Bessent Bid

The so-called “debasement trade” has found a second wind following Treasury Secretary Scott Bessent’s intervention in the bond market.

In this environment, assets like crypto and precious metals gain as investors look to hedge against the weaker U.S. dollar and Treasury debt.

— Leonie Kidd

And Finally…

Dolly Parton, queen of country music, dies at 80

Dolly Parton was around six when she wrote her first song: “Little Tiny Tasseltop,” an ode to her corncob doll with corn-silk hair. Her mother stored it preciously in a shoebox.

“I loved that little doll,” Parton wrote decades later. “I expressed myself and my feelings through writing – I’m sure what I was thinking was, ‘Well, Tasseltop has to have a song about her.’”

Parton never stopped making music after that. The irrepressible country music singer, songwriter and actress whose charisma, heartfelt lyrics and business acumen captured the public’s imagination for nearly six decades, died on Tuesday aged 80, her family said in a statement.

— Reuters

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Technologies

Verum Exchange Launches a $10 Bonus for Online Mining of Verum Coin and Bitcoin

Verum Exchange is expanding its online mining capabilities, allowing users to earn a $10 bonus while continuing to mine cryptocurrency directly from their smartphones. The feature is available not only in the currency converter app but also within Verum Messenger.

Online mining has long been part of the Verum ecosystem. Now, the company has added a new incentive to the existing feature — a bonus for participating in online mining.

The concept of online mining is changing the traditional perception of cryptocurrency mining. Users do not need to set up specialized mining equipment at home or deal with complex technical configurations. The feature can be accessed directly through the Verum digital ecosystem.

Verum Exchange: https://exchange.verum.im
Verum Messenger: https://ios.verum.im

Technologies

Supreme Court permits certain Trump mail-in voting restrictions before midterm elections

The Supreme Court has temporarily blocked a lower court ruling that prevented the Trump administration from implementing new restrictions on mail-in voting, allowing the administration to proceed with its plan to impose new requirements on states ahead of the midterm elections.

The Supreme Court on Monday sided with President Donald Trump for now in his effort to impose sweeping new restrictions on distributing mail ballots, putting on hold a lower-court ruling that had blocked key parts of the plan ahead of November’s midterm elections.

The justices, over three dissents, paused a ruling by U.S. District Judge Indira Talwani in Boston that prevented the Trump administration from carrying out portions of a March executive order involving the U.S. Postal Service and voter eligibility lists. The court’s three liberal justices dissented.

But the decision does not immediately allow the Postal Service to put its new mail-ballot system into effect.

A separate nationwide injunction issued Aug. 11 by U.S. District Judge Indira Talwani in Boston still blocks USPS from implementing the new procedures for the Nov. 3 elections. The administration would have to overcome that order as well.

The distinction was central to the Supreme Court’s decision.

The majority said Trump’s executive order itself does not require states to change how they conduct elections. Instead, it directs federal agencies to develop policies that could later impose requirements on states. Because those policies had not yet been implemented when 23 states and Washington, D.C., challenged the order, the court said the challenge was premature.

The justices stressed they were not deciding whether Trump’s order or the policies developed under it are ultimately legal.

“The Court’s disposition of this application does not mean that any measure taken by the Government to implement the Order will necessarily be lawful,” the majority wrote. “On that score, time will tell.”

The Postal Service last week finalized rules intended to carry out part of Trump’s order, including new requirements involving ballot envelopes, barcodes and information states must provide USPS. Those rules remain blocked by Talwani’s separate injunction.

The case now returns to the 1st U.S. Circuit Court of Appeals as the underlying legal fight continues. Some states have already started preparing to send ballots to military and overseas voters in early September.