In this week’s Sunday Reboot, despite Apple making more money than in any previous Q3, it’s never enough to escape a beating from investors or analysts.
Sunday Reboot is a weekly column covering some of the lighter stories within the Apple reality distortion field from the past seven days. All to get the next week underway with a good first step.
The Maddest Money
I have been covering Apple and the tech industry in general for over ten years. I have a decent understanding of how things work in many areas, but I do have some blind spots.
I have trouble understanding the logic of analysts and investors around the time of Apple’s quarterly results.
Every three months, the AppleInsider editorial team has to spend a few hours analyzing a PDF spreadsheet and a press release from Apple, detailing just how much money the company made this time. In painstaking detail.
Of course, that’s followed by listening to a conference call with people asking questions of Tim Cook and Kevan Parekh. Most of the time, the responses are predictably an inability to comment on future plans or reiterating something the pair mentioned 15 minutes prior.
This quarter’s periodic money talk was a bit different, as Cook gave a farewell speech ahead of the CEO transition to John Ternus.
For nine quarters in a row, Apple has declared total revenue that’s a year-over-year improvement over the previous one. Q1 to Q3 2026 inclusive have year-over-year increases of around 16%.
Apple makes billions, but it’s never enough for analysts.
Despite repeatedly making more money than almost anyone would see in multiple lifetimes in a mere three-month period, the same pattern emerges.
Right after the results release and everyone sees Apple make deity-level bank, the share price goes down. Over the space of an hour, the price went down on July 30 from 338.45 at 4:30 P.M. Eastern to $308.03 at 5:30 P.M.
That could be explained as investors thinking they have done enough to earn that sweet $0.27 dividend and decided to shift their money right afterward. That, at least, I can get my head around.
Gordon Gekko meets Mean Girls
The real brain burner is the swathe of analysts who then decide that Apple didn’t do enough. Despite each of its units earning billions, as if they are major companies in their own right.
Goldman Sachs, after raising the price target to $370 just days before the results, cut the target by $10 after the call. Chiefly because of Apple’s guidance that it won’t meet demand for the next quarter.
You know, during a time period when people have to get a mortgage to afford more RAM.
To Cook’s credit, he said it was not a partner or supplier issue, and was simply one of “incredibly strong demand.” Apple has the nice problem to have of being too wanted by consumers.
Rosenblatt raised its price target by $24, which sounds good except it’s still underwater at $300. Cue complaints about the “volatile financial environment” and supply constraints.
Also for some reason, the iPhone 18 will be having a hard time because the iPhone 17 was such a huge success. Apparently, the high sales for the current generation mean there’s no one around to buy the next one.
More realistically, the problem here is that the iPhone 17 did really well compared to the iPhone 16, which means it’ll be harder for the iPhone 18 to show further improvement over the iPhone 17.
Growth is all-important to investors, even if they are blinkered to Apple having other products or revenue sources available.
Morgan Stanley did a similar trim of its price target as Goldman Sachs, from $364 to $360, citing higher memory costs and slowing Services growth.
Because Services only climbed a mere 12.7% instead of MorgStan’s expectation of 14.6% growth, that apparently means growth will slow to 9.5% next year.
The annual growth percentage of Apple’s Services arm. Still aggressively positive.
By that, Morgan Stanley believes Services will earn only $2.9 billion more revenue this time next year, when it really wants to see more than $4 billion.
In effect, people are somehow complaining that a company that made billions more dollars than the same time last year didn’t quite do enough. Also that it is so popular that it cannot keep up with demand, and that’s apparently equally horrific.
Then there’s JP Morgan, which also cut its price target from $345 to $340, again hammering on about the supply constraints. However, at least the analysts are realistic, pointing out that limited product availability will push revenue into later quarters, and that Services will continue to be a benefit.
It’s not as bleak as other analysts’ denouncements of Apple’s success. But it’s still a downer.
The investors and analysts probably have justifiable reasons for pointing out Apple’s deficiencies. But from here, it seems a little bit picky and weird.
It’s almost like they’re trying to pick any perceived fault or shortcoming to justify their salaries to investors, eager to understand Apple’s workings and to know if their investment is safe.
You may have a romanticized image of high-power investors similar to shows like “Billions” and “Succession.” Each quarter, the image that gets reinforced to me is more like “The Office” or an Aldi version of Statler and Waldorf.
I just hope that I don’t get jaded enough to downgrade that view further to “Sanford and Son.”
Last week’s Sunday Reboot talked about Apple TV moving into dating, the existence of “Matchbox The Movie,” and the hope for even more “Ted Lasso”.
You must be logged in to post a comment Login