Apple’s quarterly earnings expected to disappoint Wall Street

Wall Street is waiting for Apple’s weakest second quarter profit since the pandemic.

The company is set to release its latest quarterly figures on Thursday. It will be the last major American technology group to make a report during a mixed earnings period.

Analysts predict a net profit of $22.6 billion for Apple’s second fiscal quarter in the first three-month period this year. This compares to $25 billion in the previous year and $23.6 in 2021 when the tech group saw a surge in demand due to consumers who built up savings from global lockdowns.

Apple, the most valuable company in the world, missed Wall Street’s profit expectations in the last three months of the year for the first time since almost seven years after production disruptions in China reduced sales of the iPhone.

The overall revenue dropped by 5% to $117.2 Billion in the three-month period ending December 31, which is usually its most significant quarter. At the end of 2016, it suffered supply chain disruptions, including protests in a factory located in China. Analysts questioned the demand for its product in light of an upcoming recession.

The iPhone sales, which make up about half the group’s revenue, are expected to drop to $48,8 billion in the first quarter of this year. This compares to $50.5 billion during the same period of last year.

Dan Ives of Wedbush in the United States said that the resolution to supply issues, and the pent-up iPhone demand, could lead to a return to growth within the next six to 9 months with China being “an upside shock”.

Apple’s biggest market before the pandemic, the country accounted for about a quarter of its sales. Ives stated that Apple is holding up better than other tech companies.

Wedbush estimates that 25 percent of iPhone users did not upgrade their phones in the last four years. Ives said this was a major advantage for Apple, which set it apart from other tech groups. Analysts are anticipating the release of the iPhone 15 in September. Profits are boosted by users upgrading to higher-priced handsets.

JP Morgan is also optimistic. Apple’s analysts believe that the improved iPhone supply will allow Apple to beat expectations. The bank is still predicting a drop in profits of $23.5 billion on an annual basis.

Apple’s fourth quarter fiscal year, ending in September, is expected to see a growth of three months before another decline in profits.