There seems to have been a collective sigh of relief after Apple delivered unexpectedly strong third quarter results on Tuesday.
The tech company's share price in after hours trading on Tuesday hit a record high of $159.
In early trade on Wall Street on Wednesday, the Apple share price was up 5.1% to $157.64 and boosted the blue chip Dow Jones index past its 22,000 mark in early Wall St trade.
Generally, the April-June quarter is a soft one for Apple as iPhone buyers normally wait it out to purchase newer models released in the autumn.
This wasn’t the case this time around as the company hit a significant milestone after shipments of iPhone units rose 1.6% to 11.42 million. Apple’s profit increased 12% to $8.72bn.
Services the size of a Fortune 100 company
The company displayed its best growth in three successive quarters with revenue increasing 7.2% to $45. 4bn from the same period last year.
Revenue was not just from the sale of iPhones but also healthy sales in iPads and Macs which had stagnated recently. Ipads managed 1.9% sales growth with an increase in shipments of 15% to 11.42 million units, while Mac sales jumped 6.7%.
Services also increased for the year to $7.3bn — a 22% growth rate. Double digit growth was seen around the world, in each geographic segment.
CEO, Tim Cook commented on the earnings conference call: “Services has become the size of a Fortune 100 company a milestone we have reached sooner than we expected.”
Hotly-anticipated sales of the new phone have sent Apple’s stock surging 28% this year. The rally in technology shares has sent the Nasdaq 100 Technology Sector Index up a whopping 22.52% compared to the benchmark S&P 500’s 10.61%.
Can Apple provide the missing spark?
The ripple effect of Apple’s earnings are sure to make an impact as techs have been affected by a recent spate of sell-off activity. Tech shares rallied in Europe and Asia on Wednesday particularly iPhone hardware component suppliers in Asia.
Ken Odeluga, market analyst at City Index explains: “More broadly, the Apple 'beat’ could provide the catalyst markets need to finally grab the earnings season by the horns.
"Despite a generally reassuring set of results from large-cap firms so far, enthusiasm has been palpably missing.”
Where's the love?
The NYTimes technology sector has a market cap of $276.5bn and has risen 37% this year. The tech heavy Nasdaq index, meanwhile, saw its biggest monthly gain since February in July with the composite index increasing 3.4%.
Apple may be the star performer at the moment but other tech stocks were feeling a little less of the love and investors have pulled back recently in the absence of positive drivers.
Although enthusiasm may currently be in check, market commentators still point to room for growth in the sector with investor appetite and sentiment hooked into the bigger fish.
In Wednesday’s trading in Europe, the Stoxx Europe 600 was affected by wider losses and fell 0.1% at open but the Euro Stoxx technology index was up 0.1% bolstered somewhat by Apple’s upbeat financial report.
So far, given the enthusiasm and hype for the iPhone 8, Odeluga says that while Apple played a touch-and-go quarter well, a note of caution is warranted.
"With one of its most overhyped product launches just weeks away, the risk of a misstep that disappoints both buyers and markets, remains just as high.
"The stock’s well-established history of deep corrections will remain in the spotlight, particularly if it racks up another record peak on Wednesday."