Breakfast News: Apple's "Best Quarter Ever"
January 31, 2025
| Thursday's Markets |
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Source: Image created by JesterAI.
1. Apple's Forecast Fuels Rebound
Apple (AAPL 1.10%) climbed more than 3% after the market closed following earnings, with an upbeat revenue forecast and strong Services growth offsetting disappointing news out of China.
- Q2 revenue is forecasted to keep rising: The company benefited from the holiday tailwind, with CEO Tim Cook calling it the best quarter ever and saying there's "a lot of innovation left on the smartphone." Revenue in Europe rose by an impressive 11.4%, but China saw an 11% drop. The underperformance was driven by higher competition and inventory problems.
- "I think innovation that drives efficiency is a good thing": When questioned about the rise of DeepSeek, Cook spoke positively. He noted Apple tightly integrates silicon and software, which should help it to keep pace with the evolution in the sector.
2. Tariffs Appear Imminent
Currency and commodity markets saw volatile price swings following President Trump's confirmation he would implement 25% import tariffs on Canada and Mexico, starting tomorrow.
- Immigration, drugs and subsidies are key drivers: Trump stated the 25% tariffs might not be the ceiling, suggesting they could rise. Although it's slated all imports will be included, he did hint oil could be exempt.
- Cross-asset reaction and implications: The Canadian Dollar and Mexican Peso both dropped following the news, while West Texas Intermediate (WTI) oil rose. Stocks including Ford (F 2.24%) and General Motors (GM +0.31%) fell, with concerns around supply chain disruption and retaliatory export tariffs.
3. What to Watch on Friday
Core Personal Consumption Expenditures (PCE) inflation data for December is due, with consensus expecting a 2.8% figure. Core PCE is one of the preferred inflation measures for the Federal Reserve.
- Holding at the highest level since April: A core reading at 2.8% would mean it was unchanged from the previous month. However, the headline PCE figure is expected at 2.6%, which would mark an increase from the 2.4% November print.
- Two rate cuts currently priced for 2025: On Wednesday, interest rates were left on hold to allow more time for inflation to move lower. Should today's data come out higher than expected, it could lead to decreased expectations of rate cuts later this year.
4. Intel's Turnaround Gathers Pace
Intel (INTC +5.51%) stock rose almost 3% after the closing bell, despite reporting a 7% fall in revenue and a net loss of $126 million for the fourth quarter. The results weren't as bad as expected, as the company attempts an extensive turnaround plan.
- "The cost reduction plan we announced last year...is having an impact": Interim co-CEO David Zinsner mentioned the loss was smaller than forecast, in part due to cost controls. Looking forward, the key to success will be balancing cost control and investing in R&D to maintain its tech leadership position.
- Forecasting flat earnings for next quarter: Investors will be focused on the new manufacturing process nodes and the introduction of new AI-enhanced chip technologies. Both areas saw revenue fall during the quarter, but could hold the key to long-term profitability.
5. Under the Radar
Celsius (CELH 1.16%) is expanding its focus to becoming a "lifestyle brand," a move not lost on Sanmeet Deo, CFA.
- Celsius Hydration was launched this week, the company's first major portfolio expansion: The Fool analyst approves of the strategy that goes beyond caffeine drinks, "as the company expands into complementary areas that will attract more consumers to its brand."
- "It's also looking into drinks that provide mental focus and prebiotics/probiotics through better-for-you sodas": Sanmeet concluded "While all of these categories are crowded, I'm confident its brand name can help it stand out."
Under the Radar is our newest digest section that seeks to answer: What's something important going on that no one else is talking about?
6. Foolish Fun
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