Opinion: Apple’s Mac is back with a sales record, but how long can that last?

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The Mac and iPad are back. Apple Inc. AAPL, -0.60% reported an extraordinary second quarter on Wednesday, with record results across all product categories, including the highest growth seen by Macs and iPads in years. But investors wonder how long it will last.

Apple reported fiscal second-quarter results that beat expectations, with revenue topping Wall Street estimates by $ 12.5 billion. Apple reported quarterly revenue of $ 89.6 billion, while analysts expected $ 77.1 billion. Dan Ives, an analyst at Wedbush Securities, called it a “microphone drop” quarter for the company. “We are very pleased to report record results for our March quarter despite continued uncertainty in the macro environment,” Apple Chief Executive Tim Cook told analysts on the company’s conference call. Surprisingly, Apple’s computer hardware sales grew slightly faster than that of the iPhone, Apple’s best-selling product, as more people continued to buy or upgrade computers to work from home. The iPad was very popular with students who are still stuck in remote learning classes. Both Mac and iPad experienced unprecedented growth rates in recent years. Apple said the Mac had total revenue of $ 9.0 billion, up 70%, while the iPad reached $ 7.8 billion, up 79%. The iPhone, by contrast, remained king with the largest share of revenue, $ 47.9 billion, an increase of 65%, driven by sales of Apple’s new 5G iPhone 12. It was Apple’s first full quarter with its newest iPhone. Revenue for Macs was an all-time high and was a major boost after fiscal 2020 saw a drop in Mac sales in the first two quarters of that year. “This astonishing performance was driven by very enthusiastic customer response to our new M1 chip-powered Macs,” Chief Financial Officer Luca Maestri told analysts. “IPad performance was also expanding with revenue of $ 7.8 billion, up 79%. We grew very strongly in all geographic segments, with a historical record in Japan and a record for the March quarter in the rest of Asia-Pacific ”. But the big question on everyone’s mind was: How long can the company sustain this kind of growth? Apple, for its part, declined to give a revenue forecast for the rest of the year, citing uncertainties related to the ongoing pandemic. Maestri said the company expects revenue to grow in solid double-digit amounts, year-over-year, but also noted that the traditional sequential decline in the June quarter from the March quarter will be larger than in previous years. “This was a pretty incredible quarter, and investors are going to ask about the sustainability of current demand trends, especially as I take advantage of some of the COVID benefits, in areas like services and Mac later this year,” said Katy Huberty, an analyst at Morgan Stanley. during the call. “In which segments do you see an opportunity to maintain strong revenue growth, versus where is it reasonable to assume there will be some digestion as consumers shift their spending priorities?” Cook said the company was experiencing continued strong momentum with the iPhone, which are the first entries for the Apple Watch, and that its services segment is accelerating. However, he noted that chip or component supply problems that are pervasive in the industry would hit Macs and iPads the most. “We will have some challenges there and challenges to meet the demand that we have,” Cook said. The chip shortage is expected to hit Apple’s anticipated revenue in the next quarter by between $ 3 billion and $ 4 billion, Maestri said. Apple investors were clearly nervous about how the tech giant can outperform itself and keep up with these huge numbers in the future. Shares in after-hours trading rose just 2.5%. Investors will likely have to look to the iPhone to see the huge growth in the rest of the year, Ives wrote: “With 5G now on the cards and roughly 40% of its ‘gold jewel’ iPhone installed base not updating its phones in the past 3.5 years, Cook & Co. has set the stage for a renaissance of growth in Cupertino. ” Whether that expected growth will coincide with that of this quarter is another question.