Despite Q1 & Q2 releases, Apple predicted to report bad hardware sales figures

iPhone 14

Apple is predicted to have a drop in revenue year-over-year for Q2 2023, according to TD Cowen, with results forecast to show declines in iPhone, iPad, and Mac for the quarter.

Apple will be releasing its financial results for the second quarter of 2023 on May 4, and analysts believe it will be a fairly typical report. In a note to investors ahead of Apple's results, TD Cowen believes the figures will be in line with general expectations.

Cowen models overall revenues at a 5% decrease year-on-year, with revenue at $92.2 billion for the quarter. Earnings per share is expected to be $1.43.

It is estimated that seasonal iPhone demand and "relatively weaker year-on-year iPad, Mac, and Wearables shipments" along with "normalizing demand and product launch timing" will result in slightly decreased results.

For iPhone, Cowen believes that improved early shipments into China helps matters, but to expect iPhone revenues to be down 5% YoY. The new retail stores in India could "unlock a new source of demand as the year progresses," which will help future quarters.

Sales of iPads are modeled to be down seasonally, while Mac is also suffering from a "weaker computing demand," though M2 chip launches could still be a "positive effect." Cowen thinks iPad and Mac builds could be down 5% and 14% respectively.

Services will still continue to grow on "easy comps," though Cowen warns there could be some "downside risk to licensing revenues given digital advertising market trends."

"From a stock standpoint, we believe AAPL remains a defensive name given its market cap, strong FCF supported by iPhone and Mac replacement demand, and capital returns of $90-100B. AAPL typically raises the dividend on the Mar Q earnings call," the analysts add.

Cowen has given Apple an "Outperform" rating, with a price target of $195.