Hot Tech stock to watch: Apple Inc. (NASDAQ: AAPL)

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Apple Inc. (NASDAQ: AAPL) stock rose 2.8% on 29th January, 2020 (as of 12:38 pm GMT-5; Source: Google finance) after the company posted significantly better than expected results for the first quarter of FY 20 on the back of iPhone revenue, which was up 8% on the strength of new iPhone models to $55.96 billion. This is better than the analysts’ expectation of $51.62 billion for iPhone revenue. This crucial business has improved from a dire performance in last year’s holiday period. The iPhone 11 and 11 Pro models were well received in their debut in the fall and demand in China has been particularly strong, outselling 2018’s releases in a market that has otherwise been shrinking. Apple had cut the price of its entry-level flagship iPhone by $50, to lure the buyers.

Further, there is a great demand for Apple Watch and AirPods, the two products that the company could not make enough of during the quarter. There is still more demand than supply for the $199 Apple Watch Series 3 and the $249 AirPods Pro, as per the company. Apple now has 1.5 billion active devices in use, which is an update from the 1.4 billion number that the company previously disclosed.

Furthermore, for the first quarter of FY 20, the company posted services revenue to be $12.7 billion compared to $13.07 billion estimated by the analysts. Apple’s services business, which comprises online software like iCloud, warranties like AppleCare, and content like Apple TV+, was up 17% year-over-year. The company also posted other products revenue to $10 billion compared to $9.52 billion estimated by analysts. The company has delivered the gross margin of 38.4% vs. 38.1% as per Refinitiv consensus estimates.

AAPL in the first quarter of FY 20 has reported the adjusted earnings per share of $4.99, beating the analysts’ estimates for the adjusted earnings per share of $4.55, according to Refinitiv consensus estimates. The company had reported the adjusted revenue growth of 9 percent to $91.8 billion in the first quarter of FY 20, beating the analysts’ estimates for revenue of $88.50 billion.

For the second quarter 2020, the company expects revenue to be in the range of $63 billion to $67 billion vs. $62.45 billion estimated by Refinitiv’s analysts. Q2 margin is expected to be in the range of 38% to 39% vs. 38.2% projected. Apple’s range of guidance for next quarter is wider than typical, due to uncertainty caused by the deadly coronavirus, which has shut down travel in parts of China.

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