Apple (NASDAQ: AAPL) became the first company to hit a $1 trillion market cap, in August of last year. Stock then suffered in the volatile fourth quarter but has steadily gained in 2019. It is up 27.22% year to date. With a market cap of $964.79 billion, Apple is close to hitting $1 trillion again.
The latest earnings data has reignited confidence in the market, giving investors hope that stock is ready to climb.
Apple Beats Earnings Expectations
Economists and top analysts warned that earnings would contract in the first quarter of 2019. Investors feared that some of the largest companies would see their revenues sharply decline, as the economy heads towards the end of its growth cycle. While Apple’s figures did decline year over year, they’re still impressive considering the overall market.
The company reported revenue of $58 billion for the first quarter, down from $61.1 billion a year ago. However, the result was better than the $57.5 billion analyst consensus. Apple has also raised its outlook for the current quarter, expecting to generate between $52.5 billion and $54.5 billion. Analysts had only expected to see $52 billion in the period ending June 30th.
Smartphone sales are down worldwide, with the entire industry dropping 6.6% in the first quarter. They only managed to match analyst expectations with $31.1 billion generated from its iPhone unit in Q1.
Not content to rely on the iPhone for growth, the company is investing heavily into services, including Apple Music, the App Store, advertising, cloud services, and the upcoming Apple TV+ streaming platform. Now it has 390 million accounts across all its subscription services. The company added 30 million new subscriptions in the first quarter.
Apple Will Change, but Investors Shouldn’t Worry
iPhone has dominated growth for such a long time that some investors have forgotten about the company’s other strengths. Apple remains one of the world’s most powerful brands, and the growth of its service platforms should offer hope for a future where the iPhone isn’t front and center.
The company earnings beat led to an after hours gain of 4.96% on Tuesday. Shares in the company are still compelling, and with a 1.53% dividend yield, it’s possible to make a moderate income while holding stock for long term growth.
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