What Happens After Apple Posts An Earnings Drop

When Apple (AAPL) posts its fiscal second-quarter results on May 2, 2024, analysts expect the smartphone giant to post a drop in earnings. When that happens, Apple will be the only company posting an EPS decline among the top five S&P 500 (SPY) companies.

What will happen to AAPL stock?

Over the last few quarters, Apple posted weaker device sales, offset by strong subscription growth. This time, a severe drop in device sales in China might shake up its loyal shareholders. So far, investors ignored reports that Chinese domestic smartphone makers like Huawei and Xiaomi (XIACF) are taking Apple's market share. China's economic slowdown, hurt by a perpetually weaker real estate market, is hurting iPhone sales in the country.

Apple Missed AI Boom

For over a year, spending on artificial intelligence hardware increased sharply. Microsoft (MSFT) invested in ChatGPT, Meta Platforms (META) built Llama AI, and Alphabet (GOOG) showed off Gemini.

Apple is notably quiet.

It has only a few recourses. It may get Alphabet to pay to have Gemini as the default AI on iPhones. Alternatively, it may negotiate to integrate OpenAI to give the next iPhone model generative AI capabilities.

Your Takeaway

After Tesla (TSLA) stock rallied on very poor results, Apple may enjoy a relief rally, too.

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