Apple’s $117.15 billion in revenue for the December quarter lined up with expectations after an early warning from the company about supply chain issues. It was the first miss for the company since 2019, aided by enhanced demand during the pandemic driving up previous years’ revenue for a tough compare.

Apple doesn’t provide actual “guidance” for future quarters, but it does hint at what to expect with less official statements. These statements, combined with strong Services revenue and a 2 billion active user install base seems to have satisfied investor expectations.

Wedbush

Wedbush sees Apple’s ability to avoid layoffs as a key in observing the company’s resistance to macro uncertainty. The quarter miss is the smaller story among double-digit growth in the install base and an expected 44% gross margin at the midpoint.

“Importantly, no major layoffs are planned for Apple which is a stark contrast to other tech giants and speaks to the tactician hiring by Cook & Co. over the past few years,” cites Wedbush. “With China the hearts and lungs of the Apple story this Cook commentary was key and will be digested well by investors this morning in our opinion.”

The firm guides bullish, citing a stable iPhone growth story, jaw-dropping gross margin guidance, and an accelerating China post-lockdown. Wedbush raises its price target from $175 to $180, outperform.

Cowen

Cowen takes an optimistic stance against Apple’s miss. It believes premium device demand is softening, but Apple will outperform the market given its product roadmap.

“Premium device demand is softening, but the NT LSD % Y/Y decline is better than feared,” Cowen’s note concludes. “AAPL is still a defensive name on strong shareholder returns.”

Despite the 29% year-over-year decline in Mac revenue, pent-up demand could benefit FQ2 2023 as Apple released new MacBook Pros in early January. Cowen rates Apple an outperform but lowers its price target from $200 to $195.

J.P. Morgan

J.P. Morgan cites Apple’s conservatism from Apple on guidance as a boon for investors. It de-risks investor expectations, and is key in determining Apple’s approach to the remainder of 2023.

“The guide reflects in our view what we already envisioned as a deeper down-cycle in consumer hardware,” J.P. Morgan’s note reads, “including in smartphones and PCs, and is largely corroborated by the weaker guidance from key smartphone chip supplier, Qualcomm.”

The expansion of the installed base to a record level of 2 billion is a growth driver for Apple’s services business. J.P Morgan reduced its earning estimates, which led to a price target decrease from $180 to $175.

Gene Munster

Gene Munster says Apple’s miss was from supply chain, macro, and FX headwinds. The company maintains innovation excellence with its core products, optionality with potential new products in automotive and AR, and and most importantly, an engaged and growing user base.

Apple’s declining revenue should translate to decreasing gross margin at a faster rate, yet it doesn’t. Apple guides to a 43.5% to 44.5% gross margin in the March quarter, which would be a record. This could be attributed to the product mix and favorability of high-end models, but it also strength in Apple’s ability to negotiate with component suppliers.

“What’s most important in assessing quarterly results on the long term is customer engagement,” Munster’ note says. “Apple’s installed base of active devices and subscriptions is evidence that the fly wheel is as strong as ever.”

What some call Apple’s halo effect, Munster refers to as a “flywheel franchise.” Customers continue to buy one product, fall in love, buy another product, add a service, upgrade, then repeat. This, paired with an increasing install base, will lead to further success for the company.

Piper Sandler

Piper Sandler repeats much of what the other investing firms said. Apple’s miss is attributed to FX headwinds and supply issues impacting the company’s most lucrative devices.

“COVID-19 policy in China caused constraints for the iPhone 14 Pro and iPhone 14 Pro Max,” Piper Sandler’s note reads, “which carry the highest ASPs and are the most lucrative part of Apples business. Services was a bright spot with growth sequentially.”

There is optimism for the March quarter thanks to China reopening after an extended covid lockdown and supply issues dissipating at the end of the December quarter. Apple is optimistic about strength going forward, and Piper Sandler maintains its overweight rating at a $195 price target.