Apple shares may move 3.5% on Friday

The world’s most valuable company is set to unveil its earnings for its fiscal Q4 after US markets close today (Thursday, November 2nd).

The crucial considerations among investors for Apple’s upcoming announcement:

1) iPhone 15 sales in China

Investors are eager to find out just how robust is demand for Apple's latest phone, especially in the world's second-largest economy, in the first week after its September 22nd launch.

After all, iPhones account for more than 50% of Apple’s total revenues, while sales in China make up about 20%.

Also, Apple has to fend off Huawei which delivered a surprise debut of its new Mate 60 Pro which was released just a few weeks prior to the iPhone 15.

2) Holiday season sales, and beyond

Markets are also ready to react to the company's optimism, or pessimism, surrounding about this ongoing quarter’s earnings (October-December).

The year-end period is historically Apple’s best quarter.

Shareholders would be eager to find out if Apple’s top management are hopeful over an earnings comeback, after recently being on the cusp of its longest sales slump in two decades.

But it's not just such forward guidance that markets are yearning for.

Apple’s stocks are bound to react also to the backward-looking (Q4FY23) numbers.

Key figures: Apple’s Q4 FY23 (July-September 2023) earnings

Here are the analysts’ forecasts for some of Apple’s key financial figures due later today:

• Revenue: US$ 89.35 billion
   
• Greater China revenue: $17 billion
   
• Earnings per share (EPS): $1.39

Can Apple’s AI-efforts dampen China/Huawei worries?

Beyond its existing bread-and-butter offerings, Apple has been found wanting when it comes to generative AI technology, apparently lagging behind the likes of Microsoft, Alphabet, and Amazon.

To be fair, the company is reportedly spending about US$1 billion per year, working on its own large language model a la ChatGPT called “Ajax”, as well as other artificial intelligence systems.

If CEO Tim Cooke can excite markets with further insights on Apple’s AI offerings, and how it’ll be baked into its products suite when rolled out to customers in 2024, that could trigger a surge in Apple’s stock prices.

Recall that a Bloomberg news report about Apple’s AI undertakings pushed this stock to a record intraday high on July 19th.

Since then, the stock is now trading about 12% lower from that all-time high, as concerns grow over its sales in China, amid the weakest global smartphone market since 2013.

What do Wall Street analysts currently think of Apple’s stocks?

As things stand, Apple has:

• 34 “buy” calls
   
• 15 “holds”
   
• 3 “sells”

The median projection among these analysts predict that this stock could rise by 14.8% to hit $199.76 in 12 months.

And Apple’s announcement later today would help determine just how quickly and how much of that 14.8% in potential profits will become a reality for investors.

How might Apple’s stocks react after today’s earnings?

Markets currently forecast this stock will move by 3.54%, either upwards or downwards, when US markets reopen on Friday, November 3rd (day after Apple's earnings release).

• If Apple remains bullish about its earnings prospects, especially in China, that should help push this stock higher.
   
• If Apple adds to market concerns of the China/global slump for the smartphone market, that should drag this stock lower.

To underscore how much of an impact these earnings announcement can have on the stock price, consider how Apple’s shares “gapped down” and plummeted by 4.8% on August 4th – the day after its prior earnings release.

Back then, Apple revealed a third straight quarter of falling sales, which caused its largest 1-day decline in % terms since September 2022.

Technical Analysis: Apple set to battle key moving averages

This stock has been stuck in a downtrend, posting a series of lower highs and lower lows over the past three months.

Still, Apple recently recovered from "oversold" conditions and broke above its 200-day simple moving average (SMA). This technical indicator should still serve as the immediate support level.

Near-term resistance may arrive at its 50-day SMA which now sits at $176.667.

• If the forecasted 3.54% move materializes to the upside, depending on where it finds itself at the end of today’s (Thursday, November 2nd) trading session, that could see this stock trading around the $182 mark on Friday’s open.

Such price action could even spark an upside breakout, with the 100-day SMA then potentially offering resistance.
 

• However, if the forecasted 3.54% move is to the downside, that could see this stock dragged back into sub-$170 waters once more.
  
  Then, perhaps several cycle lows since late-September between $165.67 - $169.97 may eventually intervene to support this stock, while keeping Apple mired in its downtrend.