Apple stock is up 6%+ after record Q1 results, nearing all-time high of $135
Image Source: ConceptsiPhone, YouTube Joe Rossignol / MacRumors : Apple Watch Dominated Holiday Season With Estimated 5.2 Million Shipments Jeff Dunn / Business Insider : Apple's services business is exploding Buster Hein / Cult of Mac : Google tops Apple to become world's most valuable brand Ashley Rodriguez / Quartz : Tim Cook: As the cable-TV bundle “breaks down,” change is coming Patrick Seitz / Investor's Business Daily : How Many Watches Did Apple Sell Last Quarter? Kif Leswing / Business Insider : Apple soars after its huge earnings beat Gina Hall / Silicon Valley Business Journal : Apple and Facebook gunning for Netflix with aggressive plans for original content Todd Bishop / GeekWire : Apple touts ‘record results’ for iCloud storage business as services revenue tops $7B Juli Clover / MacRumors : Apple Watch set an all time revenue record in Q1 according to Tim Cook, but the “Other” category revenue as a whole was $4.02B, down from $4.35B last year Juli Clover / MacRumors : Apple's Q1 2017 revenue from services, which includes iCloud and Apple Pay, reaches $7.17B, up 18% YoY from $6B, as Apple aims to double it in four years Tweets: Carl Quintanilla / @carlquintanilla : Best day for Apple shares since July 27. @CNBC $AAPLpic.twitter.com/RyNkZyMYr4 @foxbusiness : Apple leads the Dow higher: $AAPLpic.twitter.com/mqvStmdbmx Benjamin Mayo / @bzamayo : Apple stock opens up 5% at ~$128. All time high is close again, circa $135. https://9to5mac.com/... Jim Cramer / @jimcramer : $AAPL—Apple, own it ; don't trade it @deitaone : APPLE SHARES EXTEND GAINS FROM PREMARKET, NOW UP 4.8 PCT AFTER RESULTS ON TUESDAY; STOCK IS BIGGEST BOOST TO THE DOW, S&P 500 AND NASDAQ
Context & Ripple Effects
This February 2017 print is the moment the market starts paying for Apple as more than an iPhone company: alongside a record holiday quarter, services revenue hit $7.17B, up 18% year-over-year, and the Apple Watch posted an estimated 5.2 million shipments with an all-time revenue record even as the 'Other' category slipped to $4.02B.
The arc that follows validates the re-rating. The [[a:918615|next quarter showed iPhone units slipping year-over-year while services grew another 18% to $7.04B]], and by 2022 Apple reported $19.6B in quarterly Services revenue across 860M paying subscribers. The counterpoint sits in between: the January 2019 quarter, revised down from $89B-$93B guidance, showed how violently the stock could swing when hardware demand missed — which is exactly why the services line mattered so much here.
First-order effects
- Investors immediately re-rate AAPL, sending it up over 6% toward its all-time high near $135 on the strength of the services beat and the Watch's record revenue quarter rather than unit-growth headlines.
Second-order effects
- Facebook's parallel push into original content against Netflix — already noted in the coverage — gets a richer rival: Apple now has both the cash and a growing installed base of payers to fund exclusive programming.
- Watch's record holiday makes wearables a contested category, forcing fitness-band and smartwatch incumbents to respond on price or features in the following quarters.
Third-order effects
- If the pattern holds — and the later coverage suggests it does, with Services compounding toward $20B+ quarterly — the market structurally re-prices Apple from a cyclical hardware maker to a subscription business, cushioning the stock against iPhone-unit declines like those seen in 2017 and again around the 2019 guidance cut.
The trend: Apple's valuation is migrating from iPhone-cycle hardware economics to recurring services revenue, with each earnings print since 2017 marking another step in that recomposition.