AAPL Stock Price and Forecast: Earnings help market take a bite out of Apple bulls

Apple earnings disappoint as supply chain and chip issues hit.
The next quarter could be worse as chip issues are not being resolved.
AAPL stock falls on the results announcement.

Ivan Brian FXStreet

Apple (AAPL) stock fell on Friday as a result of a disappointing earnings release that provided little sustenance for bulls who had been hoping to push the stock to fresh all-time highs. Instead, the company did manage to beat estimates for earnings per share (EPS) but missed on revenue. The stock not surprisingly dropped straight after and closed the regular session on Friday down nearly 2%. This was actually a recovery from earlier in the day.

Apple (AAPL) stock news

The earnings report was not great, not great at all, and against such high hopes with the Apple share price pushing on just before the release as investors banked on a solid set of numbers. However, supply chain issues and those pesky semiconductor chips came back to haunt Apple. EPS came in at $1.24, which was bang in line with average estimates, but revenue missed, coming in at $83.4 billion versus $84.8 billion expected. Added to the revenue miss was a miss from iPhone sales with sales coming in at $38.9 billion versus $41.5 billion expected. The big issue was older model chips, which are used in some parts of the phone.

CEO Tim Cook said to Reuters, "Most of what we design are leading-edge (chip manufacturing) nodes, but all of the products have some legacy node components in them as well. And so that (shortage) continues into (fiscal) Q1, and we'll see what it looks like beyond that. It's very difficult to call." Apple is not alone as Amazon also had supply chain problems as it posted disappointing results. Perhaps the bull market for big tech is over. Certainly with short-term yields popping and tech at or near record highs, it is getting harder to see this tech bull market continuing.

Apple (AAPL) stock forecast

We now turn bearish on Apple (AAPL) stock as it looks like we have put in a topping formation following the long bull phase. The only factor concerning us is the massive buybacks going on across the equity sphere now that earnings season is out of the way. For Apple, this negative earnings release coupled with a lower high and a Relative Strength Index (RSI) and MACD divergence give us added belief in the bear case. This one will take a while to play out, but our medium to longer-term target is near $100. That is a longer-term view and only brings Apple back to where it was in September 2020, so not as shocking as you may initially think. In the short term expect some strong support from the 200-day moving average at $135 with the yearly VWAP also at this level. A break there has $125 as the next target support and that will take a while to break with a bounce likely. There is strong volume profile support there.

Author

Ivan Brian

FXStreet

Ivan Brian started his career with AIB Bank in corporate finance and then worked for seven years at Baxter. He started as a macro analyst before becoming Head of Research and then CFO.

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