Earnings Watch: Apple is a fortress and Amazon predicts weak Q4

Buffett and Munger are vindicated by Apple’s strong moat

Apple’s performance the past year with a cost-of-living crisis, supply chain constraints, and soaring input costs has been phenomenal and last night’s result confirms that Apple is a fortress that can withstand the volatile environment. Charlie Munger and Warren Buffett did the right assessment on Apple’s moat characteristics choosing Apple for its technology exposure over other technology companies. Apple has pricing power on both its hardware and software (recently they have announced that they will raise prices on their subscriptions).

In it FY22 Q4 earnings report the company reported revenue of $90.1bn up 8% y/y with solid revenue growth across all segments except for the iPad that saw double digit decline. All geographies showed growth except for Japan. Growth is miniscule now in its Greater China segment while Europe was surprisingly strong. While the numbers look good there is a considerable margin squeeze on Apple with the EBITDA margin hitting 30.8% down from 32.1% a year ago which also one of the reasons why the company is raising its subscription prices. Shares are up 1% in pre-market trading.

Key earnings next week

The Q3 earnings season is leaving a busy week with key US technology earnings that have seen disappointments from Microsoft, Alphabet, Meta and Amazon. Next week is less busy, but there are still plenty of important names. Toyota and Sony are key Japanese earnings to watch on Tuesday, and on the same day in the US, we will watch AMD and Airbnb earnings. On Wednesday, European equities will watch earnings from Novo Nordisk, Maersk, and Vestas. Novo Nordisk will be judged on its obesity drug adoption rate, Maersk will have to manage a weakening outlook for container shipping, and Vestas is struggling with profitability and its order intake. On Wednesday, the US earnings focus will be on Booking as an indicator of travel demand and Fortinet in the cyber security industry. Thursday is the big day with key earnings from Orsted, BNP Paribas, BMW, ConocoPhillips, PayPal, Starbucks, Regeneron Pharmaceuticals, and MercadoLibre. Friday ends with key European banking earnings from Societe Generale and Intesa Sanpaolo.

Monday: COSCO, Daiichi Sankyo, Stryker, NXP Semiconductors, Global Payments

Tuesday: Toyota Motor, Sony, BP, Eli Lilly, Pfizer, AMD, Mondelez, Airbnb, Uber,

Wednesday: Suncor Energy, Nutrien, Novo Nordisk, Maersk, Vestas Wind Systems, GSK, Electronic Arts, Qualcomm, CVS Health, Estee Lauder, Booking, Fortinet, Ferrari, Albemarle

Thursday: Verbund, Barrick Gold, Orsted, Novozymes, BNP Paribas, BMW, Enel, ING Groep, DBS Group, ConocoPhillips, Amgen, PayPal, Starbucks, Regeneron Pharmaceuticals, EOG Resources, Moderna, MercadoLibre, Block, Cloudflare, Coinbase

Friday: Enbridge, Societe Generale, Intesa Sanpaolo, SoftBank, Amadeus IT Group, Duke Energy