Interactive Investor

ii view: will 2024 be good for Apple after these uninspiring results?

Launching its first major new product category since 2015, and with AI investments potentially delivering further results this year. We assess prospects.

2nd February 2024 15:50

by Keith Bowman from interactive investor

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First-quarter results to 30 December

  • Revenue up 2% to $119.6 billion (£94.5 billion)
  • Adjusted earnings per share up 16% to $2.13
  • Dividend unchanged from the previous quarter at $0.24 per share (19p)
  • Returned almost $27 billion to shareholders, up from $24 billion in Q4 

Chief Executive Tim Cook commented: 

“Today Apple is reporting revenue growth for the December quarter fuelled by iPhone sales, and an all-time revenue record in Services.”

ii round-up:

Tech giant Apple Inc (NASDAQ:AAPL) detailed a return to sales growth, led by demand for its services such as music, but guidance for the current quarter is below Wall Street expectations. 

First-quarter revenue to the end of December rose 2% year-over-year to $119.6 billion, but with sales for products flat at $96.4 billion, hindered by a 13% decline in China to $20.8 billion. Management expects sales to the end of March of around $90 billion, shy of analyst forecasts for $95 billion and less than the $94.8 billion it generated in Q2 2023.  

By lunchtime Friday, shares in the Dow Jones and Nasdaq listed company had clawed back an early 3% decline, having come into this latest news up by 48% in 2023. That’s less than the 58% managed by Android phone software maker and Google owner Alphabet Inc Class A (NASDAQ:GOOGL), but ahead of a 43% gain for the Nasdaq Composite tech index. 

The double-digit sales fall in China followed a 2% retreat in the prior fourth quarter, although it was offset by sales gains everywhere else including a 10% rise in its second biggest region Europe to $30.4 billion. Sales in the Americas, its biggest region, improved 2% to $50.4 billion. 

In product terms, sales gains of 6% and 11% for Apple's iPhone and Services businesses to $69.7 billion and $23.1 billion respectively, countered 25% and 11% falls at iPad and Wearable items to $7 billion and $11.9 billion. 

Post results, management comments pointed to Apple’s ongoing investment in artificial intelligence as well as other innovations such as the technologies underpinning its now to be launched Vision Pro VR/AR gaming headset. There's speculation that Apple will announce a new AI powered Siri later this year. 

Broker Morgan Stanley has reiterated its ‘overweight’ stance on the shares, flagging a fair value price of $220 per share.  

ii view:

Started in 1976, Apple products today compete against devices from the likes of Microsoft Corp (NASDAQ:MSFT), Samsung, and Dell Technologies Inc Ordinary Shares - Class C (NYSE:DELL). iPhone sales remain by far its biggest category at just over a half, followed by Services at close to a quarter, Wearables, Home, and Accessories at around a tenth, and the balance of around 16% split relatively evenly between Mac PC and iPad sales.

For investors, slower economic growth in China and the West’s more strained relationship with the nation following the Ukraine war both warrant consideration. An forecast price/earnings (PE) ratio above the 10-year average suggests the shares are not cheap. Costs for businesses also remain elevated, while environmental concerns and the required use of resources in making its products should not be forgotten.   

More favourably, the tying in of customers using its services on their devices generates high customer loyalty, with its installed base of active devices now over 2.2 billion. The launch of its Vision Pro VR/AR gaming headset is its first new major product category since the Apple Watch in 2015. Investments in AI continue to be made, potentially underwriting further innovative products, while its strength of brand and geographical diversity are major positives. 

On balance, and while slow sales growth gives room for caution, the tech titan’s record for product innovation still looks to leave this household name justifying its place in diversified investor portfolios. 


  • Diverse geographical markets
  • Strong customer loyalty


  • Dependency on iPhone sales
  • Strained relations between the West and China

The average rating of stock market analysts:


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