Apple's up about 3% after hours after issuing unexpectedly high Q2 revenue guidance (14-17% revenue growth vs 9% expected). It also mentioned that margin % would remain consistent at around 48%.
However, at the same time, it mentioned that memory costs are rising. From the earnings transcript:
"I can tell you that beyond the June quarter, we believe memory costs will drive an increasing impact on our business and we'll continue to evaluate this"
So with memory costs set to increase significantly enough that it's worth calling out in the transcript, how is Apple able to maintain 48% margin?
They must be raising product prices to maintain margin %. Let me know if I'm thinking about this too simply, but did they guide revenue higher just because they're going to implement unexpected price increases in response to rising costs? They may have guided revenue higher, but they didn't say operating income would increase as well.
Question on Apple's guidance of 14-17% Q2 revenue growth vs 9% Expectations
byu/BGID_to_the_moon instocks
Posted by BGID_to_the_moon
1 Comment
They are selling shit loads of Mac Minis to devs using them to run AI models. I’d imagine they’re expecting business in that part of their product line to pick up. I wouldn’t be surprised if this (playing a role in the AI buildout) actually becomes a significant part of the story for them, and tbh it’s part of why I’ve been aggressively buying recently.
Also Apple is basically a price leader at this point, they will figure out a way to pass off the cost, and people will still keep coming back for iPhones.