What's going on?

Apple�s stock price jumped more than 5% to a new record high (tweet this) after it reported its latest quarterly earnings on Tuesday � and gave some encouraging clues concerning sales of the upcoming iPhone 8!

What does this mean?

Apple�s results for the most recent quarter were not viewed as particularly important as all eyes are on its new phone, which is set to be released in September. Amid rumors of production delays, Apple said it expects to make more revenue in the July-September quarter than Wall Street was expecting � suggesting the release is on schedule.

A few other metrics from the earnings report are worth highlighting though: namely, services revenue (e.g. Apple Pay, the App Store, etc.) was up 22% compared to the previous year. This gives ammunition to optimists that see this revenue stream as an important part of the company�s future. However, Apple�s China revenue declined 10% versus a year ago, showing how much that formerly fast-growing market has become a drag on Apple�s growth.

Why should I care?

For markets: The iPhone 8 is likely to be by far the biggest near-term driver of Apple�s stock price.

The Apple story over the next 9 months or so will largely be determined by how many iPhone 8s it sells. Investors will get a better idea over the coming months, e.g. at Apple�s next earnings report in October, when it will issue guidance for the extremely important few months following the iPhone 8�s release. Tuesday�s upbeat revenue guidance was an encouraging start � but there�s a long way to go!


The bigger picture: Some investors are worried about Apple�s lack of innovation.

The world�s most valuable public company is hugely dependent on one product: the vast majority of Apple�s revenue comes from iPhone sales or services that people use because they own an iPhone. In order to diversify itself and fuel future growth, Apple may need to invent revolutionary new products or acquire companies that it can incorporate into its ecosystem.