Apple (AAPL) tames supply chain hurdles; looks headed for a record year

Apple, Inc. (NASDAQ: AAPL) has proved many times that it is one of the most valuable brands, which is popular across the globe and still growing. In a sign that the gadget giant’s aggressive efforts to tackle supply chain issues are paying off, its shipment volumes remained elevated in recent quarters, almost matching the pre-pandemic levels.

Investors were impressed by the company’s healthy financial performance in the first quarter and management’s bullish view on overcoming the COVID-related disruption, so the stock rallied after last week’s earnings release. The uptrend should continue in the remainder of the year, if experts’ positive outlook in any indication.

Bullish View

The California-based tech firm has always been an investors’ favorite, and its resilience to the crisis gives another reason to own the stock. Going by the current trend, AAPL is probably on its way to breach the $200-mark. The increasing demand for iPhone and steady growth of the services business indicate the company would continue the winning streak this year, which is good news for those planning to buy the stock for long term.

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Read management/analysts’ comments on Apple’s Q1 2022 results

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Meanwhile, Apple executives have expressed hope that supply chain issues would improve in the current quarter from the levels seen in the final weeks of last year. The market will be closely following the comments of other tech leaders in the coming weeks to get a sense of how the situation is evolving. Earlier, Apple had faced difficulties in fulfilling orders due to logistics issues, which in turn affected sales.

In Growth Mode

After generating robust sales consistently over the years, the company still has significant room for growth, thanks to the growing popularity of its products. Interestingly, the response to new iPhone launches is as overwhelming as it was more than a decade ago when the smartphone was first released. Meanwhile, the surprise growth of the company’s services division added to top-line growth in recent years. Above all, Apple’s brand value is unbeatable and that gives the company an advantage over others.

From Apple’s Q1 2022 earnings conference call:

“As we move ahead into the March quarter, I’d like to review our outlook, which includes the types of forward-looking information that Tejas referred to, at the beginning of the call. Given the continued uncertainty around the world in the near-term, we are not providing revenue guidance, but we are sharing some directional insights based on the assumption that the COVID-related impacts to our business do not worsen from what we are projecting today for the current quarter.”

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But the company has its own share of problems when it comes to competition, like in the Chinese market where it is facing regulatory issues. Also, the pandemic-related uncertainty is far from over and the lingering supply chain crisis can still derail production and shipments.

Strong Quarter

In the first three months of fiscal 2022, sales increased in all geographical segments, except Japan, and across all major product categories. At $124 billion, total sales were up 11% year-over-year and above the market’s projection. As a result, net profit increased 25% to $2.10 per share and beat the view. Continuing its recovery from the slowdown experienced more than a year ago, iPhone sales rose 9% but growth decelerated sequentially.

After starting the new year on a low note, Apple’s shares recouped a part of the losses post-earnings, rising about 9%. Over the past twelve months, the stock mostly outperformed the industry and the broad market. It maintained the uptrend on Monday and traded higher in the afternoon.