Apple (NASDAQ: AAPL) stock price has regained investors confidence after hitting a 52-weeks low of $142 early this year. Its shares rose 33% since the start of this year; the stock is currently trading close to $210 – down only a few percentage points from an all-time high of $230 a share.
The improving investor’s confidence is due to Apple’s strategy of broadening its revenue base. Despite lower than expected iPhone revenue, the company has generated record second-quarter revenue. The revenue growth was supported by a substantial increase in services, wearable, and greater China revenue.
The company’s Wearables revenue jumped 50% Y/Y, thanks to record Apple Watch sales.
Services revenue, which hit a new record of $11.5 billion, grew 18% year over year. Apple now has more than 420M paid services subscriptions.
Besides from iPhone revenue, which dropped 12% from the year-ago quarter, the consolidated revenue grew 17% from the previous year quarter. Revenue from China also remains robust. Delays on tariffs are adding to Chinese revenue.
CEO Tim Cook says, “Greater China revenue returned to growth in constant currency with improvement in every category, bolstered with trade-in offers and government stimulus programs.”
The company is planning to invest heavily in growth opportunities for revenue base and margins expansion. For instance, it recently bought Intel’s smartphone modem business for $1 billion, in line with its strategy of owning the core technology that goes into the products.
The company is well-set to launch Apple TV Plus in November with a $9.99/month price point after a free trial. It is looking to spend more than $6 billion on streaming services.
The expected revenue growth in the third quarter is likely to support Apple stock price. The company expects quarterly revenue of $61 billion for the third quarter, significantly higher from second-quarter revenue of $53 billion. Market pundits are optimistic about Apple’s future fundamentals. Cowen, for instance, has set its Outperform rating with the $250 price target.
