What happened
Shares of Apple (AAPL -0.57%) were gaining in January, rising in line with the Nasdaq, which jumped on signs that inflation was cooling off and the Federal Reserve would reel in its interest rate hikes.
According to data from S&P Global Market Intelligence, Apple finished the month up 11%, mostly tracking with the tech-heavy index.
So what
Though there were a number of signs of slowing demand for Apple in January, investors moved back into the stock as they anticipated an economic recovery coming later in the year and believed it is fully capable of weathering any headwinds from the current macro environment.
Additionally, the stock had sold off at the end of 2022 on concerns about production challenges due to COVID outbreaks in China.
Apple announced that it would take more of its chip design in-house, likely saving costs and giving it more control over the design. Bloomberg also reported that Apple was planning to roll out a mixed-reality headset, likely in June at its Worldwide Developer Conference. The headset will reportedly cost up to $3,000, though the company is also working on a cheaper version of it.
Though Apple made some job cuts in its retail division and CEO Tim Cook took a pay cut, it was notable that the iPhone maker is now the only big tech company that has not announced major layoffs. There is little expectation that it will do so as the company did not ramp up hiring during the pandemic, unlike many of its big tech peers. That puts it in a better position than its rivals.
Now what
Apple reported fiscal first-quarter earnings on Feb. 2, and while the results were underwhelming, Apple stock actually rose on the news as Cook touted accomplishments like its installed base topping 2 billion devices; Cook also noted that production headwinds dented sales.
Revenue in the quarter fell 5.5% to $117.1 billion, missing estimates of $121.1 billion, and earnings per share also slipped from $2.10 to $1.88, which was below the analyst consensus of $1.94. On a constant-currency basis, sales growth was flat.
Despite expectations that those headwinds will continue into the second quarter, the company said that production has returned to normal levels and that it's done a lot of work to improve gross margins, which have benefited from the growth of the services segment.
Considering its abundant competitive advantages and price-to-earnings ratio near that of the S&P 500, the stock looks well priced currently even if growth is expected to be weak this year.
