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Apple’s (NASDAQ:AAPL) first-quarter fiscal 2023 results caught investors’ attention but not necessarily in a good way. The results were in the financial headlines because Apple posted an earnings miss, which is rare. Yet, AAPL stock should still gain value over the next few years and will likely reward loyal investors through the year 2025.
For many consecutive quarters, Apple has beat analysts’ consensus estimates for earnings per share (EPS). Perhaps this led to a sense of complacency about Apple. Is the company invulnerable to earnings misses?
The answer is no, but Apple’s disappointing quarterly results shouldn’t prompt anyone to give up on the company. There are actually some encouraging data points in Apple’s quarterly report. Furthermore, a downbeat earnings release now can provide a setup for a relief rally later on.
AAPL Stock Traders Are Stunned by Apple’s EPS Miss
So, here’s why some AAPL stock traders are up in arms. For the first quarter of fiscal 2023, Apple earned $1.88 per share, missing Wall Street’s consensus estimate of $1.95 per share. Also, analysts expected Apple to generate $121.7 billion in quarterly revenue, but the actual results came in at $117.2 billion.
Are these downbeat results the end of the road for Apple? Some shortsighted traders might feel that way, but let’s look at the bigger picture. For one thing, AAPL stock is holding steady, staying fairly close to the $150-ish level that’s been a magnet since mid-2021.
Besides, Apple’s quarterly data points weren’t all bad. Notably, Apple’s iPad sales of $9.4 billion exceeded Wall Street’s consensus estimate of $7.9 billion. And, that’s not the only area in which Apple demonstrated strength.
Apple Excels in Services Segment and Grows Installed Base of Devices
Here are some statistics that Apple’s skeptics might be ignoring. First, Apple achieved an all-time record in terms of quarterly services-sector revenue. Also, Apple’s installed base of active devices crossed the 2 billion mark.
Amazingly, Apple’s services revenue reached $20.8 billion. Additionally, the company’s services revenue was up 6.4% year over year and outpaced Wall Street’s forecast of $20.5 billion. This is significant, as Apple isn’t just a seller of gadgets; it’s also a major provider of a range of services.
Finally, the doubters should observe that Apple’s installed base of active devices (over 2 billion now, as we mentioned earlier) increased by more than 150 million year over year. With that figure undoubtedly in mind, Bank of America Global Research analyst Wamsi Mohan observed that Apple “continues to penetrate the installed base and increase monetization.”
So, Here’s My AAPL Stock Price Prediction for 2025
No company, not even Apple, is invulnerable to occasional EPS misses. This doesn’t mean it’s time for loyal Apple shareholders to abandon the company now.
I encourage you to look at the bigger picture and read all of the relevant data points. Apple isn’t just a seller of smartphones; it’s also a significant provider of tech-related services. And, the company is demonstrating outstanding results in that regard.
Therefore, I’m preparing for AAPL stock to break powerfully out of its long-standing range and hit $300 by 2025. Always remember, Apple is liable to have a “bad” quarter from time to time, but even the company’s worst quarters aren’t all that bad and can lead to positive surprises down the road.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.
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