Apple And AMD Surge Higher With More Gains Likely To Come

Stocks just wandered around today. Not what I thought we see, which was for the S&P 500 rise, but that is how it goes sometimes. Earnings results are front and center of course with AMD and Apple reporting tonight. So let’s move on to that.

Apple

Apple is jumping to $163.50 after hours after it posted results mainly as expected.  Revenue guidance for the second quarter is $57 billion at the mid-point below estimates of $58.9 billion. So a miss on guidance but not a disaster either, which is what the stock seemingly had been priced for.

The company broke out its service business for the first time, with gross margins of 62.9% up from 58.3% last year. The services had 19% growth, and wearables had 33%. Wearables shockingly had revenue of $7.3 billion, just behind the Mac, and is likely to be the third largest business unit by next quarter based on the current growth. Remember Beats?

By region, the significant damage came from China as reported previously. But the amount of the drop, which had not been already reported, was a stunning 27%.

If the gains hold and rises above $164, may trigger a break out to back to $182.

aapl, apple

AMD

AMD was better than feared after the Nvidia disaster. The stock is trading back to $20.85 after hours. The company reported inline revenue and earnings, while revenue guidance for the first quarter is light at 1.25 billion at the mid-point versus estimates of $1.47. Certainly not a disaster, and far better than Nvidia.

This may be the key paragraph in the AMD release, and it should worry Nvidia shareholders, at least based on my first impression:

Operating income was $115 million compared to $33 million a year ago and $100 million in the prior quarter. The year-over-year improvement was primarily driven by the ramp of Ryzen processors. The improvement compared to the prior quarter was primarily driven by Ryzen processors and datacenter GPUs, which more than offset the benefit of IP-related revenue in the third quarter of 2018.

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Disclosure: Michael Kramer and the clients of Mott Capital own Apple, Microsoft, Tesla

Disclaimer: This article is my opinion and expresses my views. Those views can change at a moment's ...

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