The technology company released its results for the last quarter; revenue growth and challenges in key markets marked its recent performance.
According to IDC data, Apple shipped 56 million iPhones in the third quarter of calendar 2024 , a year-over-year increase of 3.5%, although its share of the global smartphone market fell slightly.
The sales boost came in part from the launch of the iPhone 16 line, available about ten days before the end of the quarter, although the iPhone 15 played a key role thanks to recent promotions and software updates. However, the company founded by Steve Jobs faces challenges in China , one of its main markets, due to growing competition from Huawei in the high-end segment.
In the first nine months of the fiscal year, Apple’s revenue in China was down nearly 10% from the same period last year. On the other hand, the Mac division could perform weaker as consumers waited for the new models with M4 processors. In contrast, its digital services business is showing positive performance, driven by higher sales on the App Store and increasing adoption of other subscription services. In Q3 FY’24, services revenue grew 14% to $24.2 billion.
Despite recent growth, Apple’s stock has shown volatility over the past four years, with steeper ups and downs than the S&P 500 . Apple’s returns were 35% in 2021, -27% in 2022, and 49% in 2023 . In the face of current economic and geopolitical uncertainty, with potential rate cuts and international conflicts, the brand could experience a similar performance to 2022 and not outperform the S&P in the next 12 months or, on the contrary, it could record a strong jump in its price.
We estimate Apple is valued at around $219 per share, slightly below the current market price of around $236. The stock trades at a multiple of 35 times FY24 earnings, a high level compared to historical values. However, the company could see a rebound in revenue growth starting next fiscal year, driven by the introduction of new generative AI solutions compatible exclusively with its latest devices, which could encourage users of older iPhones and iPads to upgrade.
Additionally, Apple’s margins remain robust, with gross margins of 46% in the first nine months of the fiscal year , near all-time highs and up from 44% a year ago, supported by a more favorable product mix and a higher percentage of services revenue.
