Apple in Unique Position to Withstand Economic Storm [Report]

All eyes will be on Apple and CEO Tim Cook going into the 'Tech Super Bowl of Earnings' this week, says Wedbush analyst Daniel Ives.

So far tech earnings have been better than feared; however, on Thursday the trifecta of Apple, Alphabet, and Amazon will report earnings.

Overall, Wedbush expects a few common themes from the sector:


1) tech layoffs will accelerate with more pain ahead to curb expenses
2) digital advertising remains under pressure with some signs of stabilization on the Meta/Google front
3) prudence around guidance and conservative 2023 expectations which we believe "clears the deck" on Street numbers
4) cloud and cyber security spending is seeing relatively stable growth with pockets of demand weakness.

It's likely that Apple's earnings will be the most critical for the market, giving us a glimpse into global consumer demand and China's supply chain issues. Ives' recent checks show that iPhone 14 Pro demand is holding up better than expected, but Cook's commentary for the upcoming quarters will be important. Ive anticipates Apple will weather the economic storm ahead, helped by the large number of iPhone owners due for an upgrade.

In our opinion Cupertino will likely be more prudent around its guidance for the March quarter which is the smart move with the Street already dialing down growth expectations and much bad news baked into the stock. With roughly 20% of its golden installed base not upgrading their iPhone in ~4 years we believe Apple remains in a unique situation to withstand this economic storm better than its tech peers.

While many of its competitors have announced massive layoffs, Apple is expected to avoid such a drastic measure, implementing some cost cuts instead. We should learn more during the company's earnings call on Thursday, February 2, 2023 at 2:00 p.m. PT / 5:00 p.m. ET.


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