Should You Buy Apple Stock in Advance of the Company’s Q2 Earnings?

  • Apple (AAPL) reports its second quarter earnings on April 28.
  • The market will be watching closely for signs of chip shortages and other supply chain challenges hurting the company.
  • Apple has managed to perform strongly despite these challenges and with AAPL stock down 13% in 2022, investors might want to buy shares before the Q2 report.
Apple store. Apple Inc. (AAPL) sells consumer electronics, computer software, services and personal computers.

Source: Vytautas Kielaitis / Shutterstock.com

Apple (NASDAQ:AAPL) may be the most valuable technology company on the planet, but that doesn’t mean it’s shielded from the pullback that has impacted tech stocks over the past five months. In 2022, AAPL stock is down 13% so far. To see another slump at this scale, you’d need to go back to the stock market crash in March 2020. 

The company will be reporting its second quarter earnings on April 28. Analysts will be watching closely, particularly when it comes to supply chain disruption and its impact on revenue. Apple has run into ongoing issues with Chinese iPhone assembly plants being shut down because of Covid lockdowns in that country. An iPhone assembly plant in India that was supposed to be helping to ease the reliance on Chinese facilities made headlines last December after being shut down due to worker protests over unsanitary working conditions. It didn’t re-open until mid-January.

All of this might spell trouble for most companies. But Apple seems able to power through these sort of challenges. With that in mind, investors might want to pick up AAPL stock before that Q2 earnings report.

Ticker Company  Current Price
AAPL Apple $158.31

Apple Keeps Delivering Record Revenue Numbers

One of the reasons I’m not worried about iPhone factory closures and chip shortages is Apple’s ability to succeed despite them. Last October, Apple CEO Tim Cook told CNBC that a combination of chip shortages and Covid-related supply chain disruption in Southeast Asia cost the company roughly $6 billion in lost sales for Q4 2021. 

Despite those issues, the company delivered record quarterly revenue that was up 29% year-over-year. In January, Apple reported Q1 2022 results. Despite the continued supply chain challenges, it was another record quarter. Revenue of $123.9 billion was up 11% YoY and set an all-time record for quarterly revenue. Earnings-per-share of $2.10 were up 25% YoY, and handily beat the $1.89 Wall Street was expecting.

In addition, Tim Cook — who is a supply chain guy at heart — told CNBC that he expected the situation to improve. He projected that the supply chain disruption (especially chip shortages) for Q2 would be significantly less than in Q1. AAPL stock popped 7% the next day.

New Products and Thriving Services Should Keep Revenue Flowing 

Let’s take supply chain and chips issues out of the mix for a moment.

One of the best reasons to invest in AAPL stock these days is the company’s explosive Services revenue growth. This includes App Store sales and subscriptions to services like Apple Fitness+, Apple TV+ and Apple Music. The company ended 2021 with 745 million paid subscriptions — counting its own services and third parties billed through the App Store. In the past quarter, Services revenue continued to show strength. It hit $19.5 billion for the quarter, up 24% YoY. 

That Services revenue is not dependent on chips or the supply chain, providing an excellent buffer against any issues Apple experiences on those fronts.

Furthermore, Apple investors can look forward to a banner year of new product releases. I’ve already written about some of these, including the iPhone SE 3 with 5G, the M1-powered iPad Air, the all-new Mac Studio and the extremely powerful M1 Ultra — the world’s most powerful PC processor. We’re expecting a full slate of new Apple releases through the year, including more new Macs, a new Apple Watch, the latest AirPods Pro and the iPhone 14 series in the fall.

If you’re worried about slumping PC demand taking a bite out of Apple’s Mac sales, think again. In the most recent quarter, global PC sales were down by 7.3%. However, consumers continued to snap up new Macs, driving 8.6% Mac growth even as most PC makers were struggling.  

Expect Apple to have a good year. Even better if it can get those kinks out of the supply chain. That means AAPL stock is positioned for growth. 

Should You Buy AAPL Stock Now?

Apple stock earns a “B” rating in Portfolio Grader. You’re not taking a big risk when you invest in this company, especially if your focus is long-term growth. As to whether you should buy AAPL stock now — in advance of the company reporting its Q2 earnings — I would be inclined to make that move. If the company’s supply chain issues are indeed less disruptive than they were in the first quarter, odds are we are looking at yet another quarter of record revenue. And that has a good chance of kicking off an AAPL stock rally.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.

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