Apple fell double digits in Q1, but Bernstein sees reason for optimism
Investing.com -- Apple fell double digits in the first quarter as concerns about weak iPhone demand and regulatory headwinds weighed, but some on Wall Street suggest taking a closer look at the stock as the slump has dragged its value well below historical averages and its fundamental business model remains intact.
While AI powered smartphones aren't new and Apple may behind the curve, history shows that the iPhone maker doesn't need to be first nor convince Andriod users to switch, but rather persuade its existing 1.2M iPhone users to upgrade. iPhone sales reached 230 million units in 2015, has been around that level ever since. During this period of maturing iPhone sales, Apple has, however, continued to churn out double digit earnings growth.
But App store revenue in Europe makes a just a meagre 7% slice of global App store revenue, and just 1% of Apple's revenue. The bigger risk is if those same regulatory headwinds appear in the U.S., but for now the Department of Justice's case in the US is much"more about trying to open Apple up," Bernstein argues.
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