Apple earnings smash expectations with record $123 billion revenue in Q1

Yahoo Finance's Julie Hyman and Brian Sozzi discuss Apple's blowout earnings with profits topping a record $30 billion despite supply chain challenges.

Video Transcript

JULIE HYMAN: Let's talk about something else that maybe is fueling some optimism this morning. And that is Apple. Apple coming in, defying expectations, including apparently its own for its numbers this quarter. Let's run through those numbers real quickly here. Sales up 11%, $123.9 billion. $123.9 billion in the quarter. That is record revenue for the company. Earnings per share, as you can see, coming in $0.20 above estimates. What's going on here? A couple of things that we have to note.

First of all, there were some new products during the quarter that helped Apple, the iPhone 13, the Apple Watch Series 7, some updated Macs as well. Apple itself had said supply chain constraints were going to be a problem for it. They didn't seem to be as much of a problem as either the company itself or the street expected. And that's how you got those gains that you see in revenue across those different products. The one product that was a bit disappointing was that iPad down 14%.

But everything else saw increases despite the supply chain issues. And one more thing that was a big growth driver that we got to mention is the growth in China. Greater China revenue up 21% to $25.8 billion. And Apple retook the top market share spot in China. There was a big drop for Huawei. And Apple retook that spot [INAUDIBLE]

BRIAN SOZZI: This is a big quarter. And it is disappointing to me that a quarter like this out of Apple, where it just smashed expectations is not getting love on Wall Street. If this was a couple of months ago, a report like this would probably be sending stock futures higher, and things would be great, and we have a lot of positive headlines into the weekend, and we can go and drink our tequila, and have a great Saturday and Sunday. But it's not. And that's a red flag to me.

But nonetheless, on this quarter, very impressive. And I was cracking up a little bit this morning. Dan Ives over Wedbush calling this the Rocky Balboa type quarter from Apple. And I get it, you know, Apple was down and out coming in. Into this quarter, the stock was under pressure, was being sold off in these tech stock sell offs. And they really showed they are an absolute beast. I will note two things. One, Mac sales up 25%. Apple is primarily now using its own M1 chips for its Mac. That is ultimately another negative I would argue for Intel after its challenging quarter this-- earlier this week.

Apple's no longer using Intel for its chips. Secondarily, look at the guidance here from the company. Still pretty good for the March quarter, but they do expect a little bit of a slowdown as supply chain constraints continue.

JULIE HYMAN: Yeah. The rate of growth they said would decelerate even though Apple is still looking for a record revenue quarter in the current quarter. So that's something to keep an eye on as well. Just-- the numbers continue to boggle the mind, there are 1.8 billion Apple devices currently in use. Over the past two years, that's an increase of 300 million devices.

BRIAN SOZZI: Crazy.

JULIE HYMAN: So just the sheer penetration of Apple's ecosystem is impressive. And what strikes me, Sozzi, is that for years now, a lot of sort of naysayers of Apple have said, what is the next thing? Right. What is the next product? Is it going to be a hardware TV? Right. We, obviously, didn't get that. We got services instead. Is it going to be a car or some kind of autonomous driving project? That has not yet materialized. And yet, Apple just keeps growing that core quarter, after quarter, after quarter.

BRIAN SOZZI: And who's to say it's another self-created product, Julie. On the call, you know, they didn't talk much about this, but they noted strength and fitness. If you're Apple and just given all the cash that you have, why aren't you out here at least considering a potential deal for Peloton? Imagine bolting that Peloton hardware in that universe, that subscriber base to whatever you are doing in the fitness sphere. I mean, it'd be an incredible purchase for this company at a severely discounted price.

JULIE HYMAN: Just want to--

BRIAN SOZZI: It reminds--

JULIE HYMAN: That's intriguing.

BRIAN SOZZI: Julie, it would remind me of what Apple did a couple of years ago with Beats. It's-- in many respects, it would be the same type of purchase, except Peloton, I believe, is a lot bigger.

JULIE HYMAN: Yeah. That would be a lot. I don't know. That would be interesting. Call up Tim Cook. I quickly want to check on the suppliers for Apple as well. That's something that we tend to watch even though Apple is its own supplier more so than it used to be, right? So just keep an eye on some of those suppliers here this morning. They do tend to move in line with those Apple numbers.

So that's something that you want to watch as well as we're talking about Apple in today's session. Qualcomm, by the way, as I look at how it's doing in pre-market, it's up about half a percent. So not a big gain there.