Yahoo Finance ETFs in Focus Post Apple's Q3 Earnings and Revenue Beat
Apple Inc. AAPL reported solid third-quarter fiscal 2023 results, wherein it beat estimates on both earnings and revenues. While revenues dropped for the third consecutive quarter on a decline in iPhones sales, earnings returned to growth after two consecutive quarters of flat or declining profits. Additionally, services revenues also hit a record high.
However, the tech titan forecast another revenue decline for the current quarter, spreading fears of pessimism. Apple shares dropped as much 2.5% in after-market hours on elevated volume. The decline in regular trading would put Apple at risk of losing its historic milestone of $3 trillion valuation reached in June (read: Take a Bite of These ETFs on Historic Apple's $3T Valuation).
This has put ETFs having the largest allocation to the tech titan in focus. Technology Select Sector SPDR Fund XLK, Vanguard Information Technology ETF VGT, MSCI Information Technology Index ETF FTEC, iShares US Technology ETF IYW and Invesco QQQ QQQ have Apple as the top or second firm with a double-digit allocation and carry a Zacks Rank #1 (Strong Buy) or 2 (Buy).
Apple Earnings in Focus
Earnings per share came in at $1.26, beating the Zacks Consensus Estimate by 7 cents and improving 5% year over year. Apple returned to earnings growth after two consecutive quarters of flat or declining profits. Meanwhile, revenues dropped 1% year over year to $81.8 billion but edged past the estimated $81.36 billion. This marks the third consecutive quarter of revenue decline. Strong revenues from Apple's services business was offset by disappointing sales of iPhones and iPads.
iPhone sales dipped 2.4% to $39.7 billion due to a decline in demand as the company prepares to unveil the next version, which promises to be the most significant upgrade in three years. Mac sales dropped 7% to $6.8 billion, while iPad sales declined 20% to $5.8 billion.
Services revenues, comprising iTunes, Apple Music, iCloud, Apple Pay and Apple Care, soared 8.2% year over year to record $21.2 billion. Revenues from Wearables, Home and Accessories, which include Apple Watch, AirPods, HomePod, Apple TV and Beats headphones, rose 2% to $8.3 billion.
The tech giant expects fiscal fourth-quarter year-over-year revenues to be “down,” similar to the third quarter. An additional drop in revenues would mark the longest streak of declines in two decades — a surprising slowdown for the world’s most valuable company (see: all the Technology ETFs here).
ETFs in Focus
Technology Select Sector SPDR Fund (XLK)
Technology Select Sector SPDR Fund targets the broad technology sector and follows the Technology Select Sector Index. It holds about 65 securities in its basket, with Apple making up for a 23.3% share. Technology Select Sector SPDR Fund has key holdings in software, semiconductors & semiconductor equipment, and technology hardware, storage & peripherals.
Technology Select Sector SPDR Fund is the most popular and heavily traded ETF, with AUM of $51.6 billion and an average daily volume of 6.6 million shares. The fund charges 10 bps in fees per year.
Vanguard Information Technology ETF (VGT)
Vanguard Information Technology ETF manages about $54.3 billion in its asset base and provides exposure to 322 technology stocks. It currently tracks the MSCI US Investable Market Information Technology 25/50 Index. Here, Apple accounts for a 23.1% share. Systems software, technology hardware storage & peripheral, semiconductors and application software are the top four sectors.
Vanguard Information Technology ETF has an expense ratio of 0.10%, while volume is solid at nearly 512,000 shares.
MSCI Information Technology Index ETF (FTEC)
MSCI Information Technology Index ETF is home to 311 technology stocks with AUM of $7.5 billion. It follows the MSCI USA IMI Information Technology Index. Apple accounts for a 22.9% allocation.
MSCI Information Technology Index ETF has an expense ratio of 0.08%, while volume is solid at 242,000 shares a day.
iShares US Technology ETF (IYW)
iShares Dow Jones US Technology ETF tracks the Russell 1000 Technology RIC 22.5/45 Capped Index, giving investors exposure to 136 U.S. electronics, computer software and hardware, and informational technology companies. Apple makes up 18.8% of the assets.
iShares Dow Jones US Technology ETF has AUM of $11.6 billion and charges 39 bps in fees and expenses. Volume is good as it exchanges 978,000 shares a day.
Invesco QQQ (QQQ)
Invesco QQQ provides exposure to the 101 largest domestic and international non-financial companies listed on the Nasdaq by tracking the Nasdaq 100 Index. Apple accounts for an 11.7% share (read: Nasdaq-100 Rebalance: What ETF Investors Should Know).
Invesco QQQ is one of the largest and most popular ETFs in the large-cap space, with an AUM of $211.1 billion and an average daily volume of 48 million shares. It charges investors 20 bps in annual fees.
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Apple Inc. (AAPL) : Free Stock Analysis Report
Invesco QQQ (QQQ): ETF Research Reports
Technology Select Sector SPDR ETF (XLK): ETF Research Reports
Fidelity MSCI Information Technology Index ETF (FTEC): ETF Research Reports
iShares U.S. Technology ETF (IYW): ETF Research Reports
Vanguard Information Technology ETF (VGT): ETF Research Reports