An additional $110 billion in share buybacks will boost investors' confidence as Apple’s Fiscal Q2 revenue slightly slid over the year.
Apple authorized an additional $110 billion buyback and announced a 4% increase in cash dividend after posting lower revenue in Q2, though better than analyst expectations. The company dropped 4% revenue to $90.8 billion for the quarter. However, experts believe that the iPhone maker will be back to higher revenue in the next quarter. The buyback announcement helped the stocks jump 6%.
Apple’s iPhone was a revolution when it first hit the market and the loyal fan base still only buys these phones. However, Apple is no longer the top seller of smartphones in the world, and Android phones have taken up considerable space in the market. Chinese cell phone makers and South Korea’s Samsung are claiming considerable market share. However, experts believe that the cell phone sales will pick up in the coming quarter, driving revenues higher. The American tech giant also expects higher sales of iPads with higher margins to help its recovery.
Apple, unlike Android, has its app store. So far, the business model has been lucrative with Apple controlling the apps on the store. Apple is facing antitrust charges for raising prices by working with partners such as software developers to raise the prices of the products. The company is also accused of raising smartphone prices in a monopolistic manner, taking advantage of its position in the market. Apple is not the only company under investigation; other companies such as Alphabet and Amazon also face similar charges.
Apple has not spoken about its AI-related plans. However, if they can deliver something special, AI can be the tech giant's trump card in regaining its market edge. Apple’s CEO Tim Cook expressed his excitement about AI prospects.
"We continue to feel very bullish about our opportunity in generative AI and we're making significant investments," he said. "We're looking forward to sharing some very exciting things with our customers" at events later this year, Cook said.
For investors, not everything is bad about Apple. A drop in revenue is not great, but it is unlikely to happen again anytime soon. The company has performed well generally and posted a $1.53 EPS, beating the estimates. The company is expected to stay strong and deliver in the foreseeable future. The share buyback program also shows Apple’s confidence in its current financial health.
