On Tuesday, Apple stock experienced a decline after a Wall Street firm adjusted its estimates for the company’s March quarter. This adjustment was due to sales-channel checks that demonstrated lower iPhone sales and a decline in China. Needham analyst Laura Martin, though she decreased her estimates for Apple’s fiscal second quarter, retained her buy rating on Apple stock, noting the significant obstacles the company faces.
Martin mentioned that Apple’s growth outlook is anemic, or even negative, and that cost increases to fund generative artificial intelligence stand as the primary obstacles preventing new investors from buying AAPL. Despite the decrease in iPhone sales as evidenced by the channel checks, there was a slight increase in revenue from iPad and Mac computer sales.
For the March quarter, Martin estimates that Apple will report hardware sales of $67.6 billion, a 9% decrease year over year, and services sales of $23.3 billion, an 11% increase. She predicts iPhone sales of $46.6 billion, a 9% decrease year over year. Martin’s model for Apple shows earnings per share of $1.51, a 1% decrease, on total sales of $90.8 billion, a 4% decrease for fiscal Q2. Analysts polled by FactSet are expecting earnings of $1.51 per share on sales of $90.7 billion.
Martin also revised her Apple revenue and earnings targets for this fiscal year and the next based on her conversations with clients who decreased their demand for iPhones due to rising costs associated with generative AI development and other factors such as economic uncertainty in China and trade tensions with the US government which lead to slower economic growth in China