Apple
‘s upcoming earnings are a bellwether for the health of the consumer and are “critical for markets,” experts say.
The tech giant is expected to post third-quarter earnings Thursday.
“This week’s
Apple
earnings report is critical for markets, as
Apple
is not only the market’s most valuable company, it’s also a litmus test for consumer spending, which so far has been keeping the economy afloat, but we have been seeing some signs of a consumer slowdown,” Michael Landsberg, chief investment officer at Landsberg Bennett Private Wealth Management, wrote on Monday.
The latest GDP report showed that personal-consumption expenditures increased by 1.6% in the second quarter, which was a drop from the first quarter’s 4.2% increase. Shoppers spent more on services than goods in the period.
Consumers have felt their wallets pinched as inflation remains stubbornly high and interest rates rise. This has resulted in shoppers looking for bargains.
Apple (ticker: AAPL), which sells popular consumer electronics at premium prices, will be an indicator of how the consumer behaved over the last three months, Landsberg said. If the company reports that much less people are shelling out cash to purchase iPhones and MacBooks, that could be a sign that the consumer is weakening, potentially worrying investors and negatively impacting the markets.
“Apple’s earnings give a good indication on the state of the consumer and investors will be looking to see if Apple’s quarterly year-over-year revenue continues to decelerate,” Landsberg added. Wall Street analysts surveyed by FactSet expect the iPhone maker to report third-quarter revenue of $81.47 billion, which is a decline from the $82.96 billion in the same period last year.
Wedbush analyst Dan Ives also says Apple’s earnings will be an important indicator of the current state of consumer health.
“The entire Street will be laser focused on Apple’s quarter as when Cook talks
everyone else listens given Apple’s unique perch and perspective around consumer demand globally and what this means for the path looking forward,” Ives wrote in a research note Sunday. He maintained his Outperform rating and $220 price target on the stock.
Shares of Apple were down 0.2% Monday to $195.50. The stock has surged 50% in 2023.
Write to Angela Palumbo at [email protected]
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