Apple and Amazon Report

4 August 2023

Apple (AAPL.NASDAQ)

Strong sales from Apple weren’t enough to impress shareholders as the company’s stock moved downwards to ~$186 aftermarket. Services revenue was a bright spot (+8%) – all those iCloud subscriptions add up. Gross margin remained strong at ~44.5%. It’s the devices business which gives pause – iPad sales fell 20% while Mac sales slowed 7%; more notably iPhone sales declined 2% YoY. 

What to take from all this? Apple’s growth has finally seen a slow-down – the economy has caught up to it. A +$1000 iPhone isn’t front and centre of consumer’s minds. The company’s growth has plateaued (total sales sat at -1% YoY). No doubt it will continue to grow, but growth has slowed, and it’s hard to value a single-digit growth company at +32x earnings. 
We downgraded Apple a little too early last quarter, and we maintain our hold rating.


Amazon (AMZN.NASDAQ)

Amazon shares are up 8% in after-hours trade which revealed strong online advertising numbers for its second quarter result.

Online advertising revenue came in at $10.68B, up +22% from the previous year which was the highlight – becoming a lucrative business on its on representing 7.3% of total worldwide digital ad market. While the core profit maker AWS revenue increased +12%, similar to Microsoft’s Azure is showing signs of slowing down due to its now large and establish base. We still like the business and feel you are paying for AWS and its advertising arm, while the e-commerce business for free. Given the strong run this year, we would sit tight for now, and be buyers below $130.

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