We're not expecting a good result or outlook from Apple's earnings, says D.A. Davidson's Gil Luria

Key Concepts:

• Apple earnings report
• Tariffs impact on Apple
• Consumer-driven slowdown
• Guidance (financial forecasting)
• iPhone upgrade cycle
• Meta and Microsoft earnings
• Company guidance suspensions

Apple Earnings Preview: Tariffs, Consumer Slowdown, and Guidance

• Context: The segment focuses on what to expect from Apple's upcoming earnings report, particularly in light of potential impacts from tariffs and a consumer-driven economic slowdown. The stock has been moving higher in anticipation.
• Analyst Perspective: D.A. Davidson's Gil Luria, who has a buy rating on Apple with a $230 price target, provides insights.
• Expectations: Luria doesn't anticipate a strong earnings result or outlook. The primary focus is on Apple providing visibility and a stable outlook, demonstrating they understand the impact of tariffs.
• Tariffs Impact: The key concern is the impact of tariffs on Apple's business, specifically importing equipment and handsets into the US.
• Consumer Slowdown: Luria emphasizes that Apple, as a consumer products company, will likely be among the first to feel the effects of a consumer slowdown. He contrasts this with Meta and Microsoft, whose earnings were better than feared, noting that a consumer slowdown could later affect advertising and enterprise technology.
• Guidance Expectations: While acknowledging the possibility of Apple suspending guidance (as they did during the pandemic), Luria believes Apple has had enough time to assess the potential impacts and likely has a range of possible outcomes. He doesn't expect aggressive guidance.
• iPhone Upgrade Cycle: Luria references the previous expectation of a 10% iPhone growth rate this year due to the AI upgrade cycle, suggesting this target is now unlikely.

Company Guidance Trends

• Growing Trend: The segment notes a growing trend of companies pulling or suspending guidance, citing examples like GM, JetBlue, UPS, Stellantis, and Snap.
• Uncertainty: This trend reflects the current economic uncertainty and the difficulty companies face in accurately forecasting future performance.

Notable Quotes:

• "We're not expecting a good result or a good outlook. What we're really hoping for is for Apple to give us visibility and a sense for a stable outlook that they've wrap their heads around." - Gil Luria
• "The impact from tariffs is going to be, and that they can give us an outlook based on that." - Gil Luria
• "Let's not forget we're talking about a consumer driven slowdown. And Apple is the consumer products company." - Gil Luria

Technical Terms:

• Earnings Call: A conference call where a public company discusses its financial results with analysts and investors.
• Guidance: A company's forecast for future financial performance.
• Tariffs: Taxes imposed on imported goods.
• AI Upgrade Cycle: A period of increased sales driven by new features or capabilities related to artificial intelligence.

Logical Connections:

The segment connects the broader economic concerns (tariffs, consumer slowdown) to the specific case of Apple, highlighting how these factors are likely to influence the company's earnings and guidance. It also draws a comparison with other tech companies (Meta, Microsoft) to illustrate the potential differences in impact based on their business models.

Synthesis/Conclusion:

The main takeaway is that Apple's upcoming earnings report is expected to be heavily influenced by tariffs and a consumer slowdown. While a strong performance is not anticipated, investors will be closely watching for Apple's guidance and its assessment of the potential impacts on its business. The trend of companies suspending guidance adds to the uncertainty surrounding Apple's outlook.