Apple (AAPL) announced its first quarter financial results, revealing that its sales in China decreased by 13%.
Martin Yang, senior analyst for emerging technologies and services at Oppenheimer, joins Yahoo Finance Live to discuss Apple's posture globally and how it compares to other Magnificent Seven companies. Masu.
Yang believes Apple's problems in China stem from macro issues rather than competition. Yang said Apple's high resale value and durability make it a “high-value product” compared to competitors such as Huawei and Xiaomi.
Yang claimed that AI integration was “one of the most important things to the early success of the next-generation iPhone,” and predicted that the company would focus on this as it launches new phones. ing.
Watch the video above to see what Yang thinks beyond the iPad.
For more expert insights and the latest market trends, click here to watch the full episode of Yahoo Finance Live.
Editor's note: This article was written by Ike Ntekim
video transcript
– Another big story in the markets this morning are some of the earnings results released over the past 24 hours. And for a completely different story, look at Apple. Compared to what we saw this morning from Meta and Amazon's stock prices, Apple's stock was only down about 3%, even though first-quarter sales were up about 2% from a year ago.
But the big story is the slowdown we've seen in China. This fact overshadows the stronger numbers of the tech giants that surprised us here. Let's break it all down.
We want to get Martin Yan. He is a senior analyst for emerging technologies and services at Oppenheimer. I'm glad you're here.
With that in mind, Apple's report was better on some metrics. However, sales in China fell 13% in the quarter. What do you think this tells us about Apple's challenges over the next few quarters?
Martin Yang: I think this says more about Apple's exposure to macro weaknesses than its competitive position in various regional markets. We do not believe the competitive threats Apple sees in China will persist for long. I think this is a very short-term impact based on his 1-2 single models from Huawei and Xiaomi. And we think most of the pressures we're seeing in China are more macro-related than competitive.
– So, Martin, you can take a look at these results and try to figure out exactly where Apple might write a mistake. Segment by segment, I mean, there were a lot of disappointments here. So, as I was looking at it last night, I said, Okay, it looks like this consumer is completely driving prices down right now.
It's definitely continuing some of these cycles that Apple has probably gone through in the past. What does this do in terms of some kind of larger cycle adjustment, whether it's across service spend or across other wearable products?
Martin Yang: of course. When it comes to price, I would argue that Apple offers the best value of all smartphone OEMs. It is true that the premium is quite high compared to other products. But it also has a much higher lifetime and resale value.
So when you consider the cost of ownership and the savings you get from higher product durability and quality, Apple is actually a better value compared to other smartphone vendors. Also, in major markets where carriers offer installment plans, sticker shock for iPhones is definitely reduced.
For other products, I think the most important driver is new product releases. There haven't been any meaningful new releases for iPad or AirPods in the past six to nine months. Therefore, when new products are introduced, the growth rate of hardware accessories, Macs, and iPads will pick up again.
Martin Yang: Martin talks about what's to come here. Tim Cook's comments about his AI also caught my attention yesterday. He didn't give too much information about it.
But he said it's possible we could make an announcement, or Apple could make an announcement later this year. When we talk about the fact that we need products that excite consumers, how big a catalyst do you think the potential for AI integration into your products will be?
Martin Yang: You know, I think one of the most important things about the early success of the next generation iPhone. And you'll get to know how AI works on your device and what new features it has. It is expected to take effect around June when Apple hosts WWC 2024.
And I think with what Samsung announced earlier this month, earlier last month, there's a very obvious use of AI on the device to create better photos, better automated translations, and better writing. . And I think Apple will need some new features that are unexpected but very useful for users.
– What products do you think will be possible? And we've been watching this iPad very closely in this area. Of course, it is anticipated that vision could one day possibly bring about major changes, or at least become additive. However, I don't know if it will be included in wearables or anything like that, but will another product need to replace the iPad in the future?
But that doesn't really matter. That is, as long as it contributes positively to the company's future profits. Can it actually fill the gap where we're seeing at least some decline in consumer demand for products like the iPad?
Martin Yang: Well, in the case of the iPad, I think one of the most important factors for the iPad is the change in form factor. And smartphones are starting to be the first to adopt foldable and flexible displays. So it makes sense that in the future the iPad would adopt technology that would allow the 13-inch or even 14-inch iPad to rotate and fold into a much smaller book form factor, making it even more portable than the iPad. It will be a choice. Today is mini. I think that will be a very important driving force for the future growth of the iPad.
– Martin Yang is a senior analyst for emerging technologies and services at Oppenheimer. Martin, thank you so much for taking the time to talk to us about Apple this morning.
Martin Yang: Thank you for inviting me.
