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Amazon, Apple Underwhelm As Questions Outnumber Answers
Amazon, which was in the news this week for kissing Donald Trump's ass, rang up $155.7 billion in re
Tariffs were the #1 topic of course, and while the possible June quarter hit of 100bp to margins and 5 cents to EPS isn’t bad, AAPL said the impact to future quarters would be higher – and all this assumes the applicable tariffs stay exactly as they are today, a shaky premise.
Analysts didn’t get a lot of answers on “how much higher”, but the help from pull-forward of production in March qtr and sourcing all June qtr US-sold product from India and Vietnam won’t repeat in future quarters, at least not until ex-China assembly capacity is greatly increased, and then will cost for India/Vietnam assembly with increased ex-China component sourcing end up competitive to the China supply chain AAPL has enjoyed ’til now?
So investors can’t enjoy the all-things-considered decent June qtr guide, they have to brace for potentially worse in Sep, Dec etc – again, even if somehow there are no tariff changes.
Management said there has been no pull-forward of US demand, which seems improbable. Guidance also does not assume slowing consumer buying which may be reasonable for iPhone-addicted American consumers (but for how long), but maybe not for Chinese consumers for whom an iPhone is a luxury purchase of a conspicuously American product.
Further delay, not well explained, in un-dumbing Siri with Apple Intelligence. Some concern about services growth given all the legal/antitrust actions. A downbeat call.
Thanks JL. A reasonable distillation.
All segment toplines slowed, all segments saw slower margin improvement. AWS growth rate slipped below 17%. Saying AI is a “multibillion dollar annual run rate growing triple digits percentages year over year” doesn’t have much wow factor anymore.
No answers on tariffs and questions weren’t pointed. Advertising, AWS, and subscription driving the growth, and those aren’t directly tariff exposed – good. No questions about Kuiper launch, AMZN’s self-driving car testing, increasing rural delivery network; not even much about custom silicon program.
Kind of a middling performance I thought – not bad, nothing to really punish the stock for, but nothing to reward it for either. Zzzzz.