Nasdaq 100: Apple Gaps to $281 After Hours, Guidance Impresses but iPhone Lags

Apple Beats on Guidance but iPhone Keeps Missing

Apple Inc. gapped to $281.65 after the close Thursday, up $10.30 or 3.80%, on a beat that covered almost every part of the business except the one that matters most.

Technical Outlook

Technically, the main trend is up on the daily chart. This was reaffirmed shortly after the report was released following the close on Thursday with the stock gapping to $281.65, up $10.30 or 3.80%. This move took out the February 6 main top at $280.90, putting it in a position to challenge the December 3 top at $288.62 on Friday.

Guidance Did the Heavy Lifting

The number that moved this stock after hours was not the earnings beat. It was the guidance. Apple’s forecast for the current quarter came in well above what analysts were expecting and that is what sent it higher. When guidance clears by that margin, the market does not wait around.

Everything Ran Except the iPhone

Here’s the thing. Mac, iPad, wearables and services all beat. Year-over-year growth held up across the board. New product launches, updated iPhones, iPads and a lower-cost laptop aimed at students, helped drive demand. iPhone sales came in slightly below estimates. That is two quarters in a row now. When the most important line in the business keeps missing, I pay attention regardless of what the rest of the report looks like.

Memory Costs Are the Next Problem

Supply pressure is building and it is tied directly to AI. Memory components are getting more expensive. Apple said the impact is manageable right now but made clear it is not going away. Costs are expected to rise and the company is still working out how it handles them. I’ve watched supply cost stories start as manageable and become the whole story. This one is worth tracking.

New CEO on the Call

This was the first earnings report since Apple announced Tim Cook will step down and John Ternus will take over. Ternus was on the call. He pointed to a strong product pipeline without getting into specifics. The market is not treating the transition as a disruption yet. Whether that holds depends entirely on what comes next.

AI Running on Two Tracks

Apple is spending more on research and development and artificial intelligence is driving a significant part of it. The Google partnership on Siri is moving forward and management said it is progressing well. Apple is also building its own technology internally at the same time. The question is which track produces something.

What I’m Watching

The gap through $280.90 puts $288.62 in play on Friday. The stock needs to hold this move. On the business side, rising memory costs and the CEO transition are the two things I keep coming back to. Services is doing its job. iPhone needs to start doing its job. One more quarter of missing that number changes the conversation.

More Information in our Economic Calendar.