Apple earnings may offer insight on iPhone demand, China reopening
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Apple (NASDAQ:AAPL) is slated to report fiscal first-quarter results on Thursday and the tech giant's quarterly report may give investors additional insight into how its supply chain is operating and what impact it's had on the all important iPhone.
In November, Apple (AAPL) warned that China's COVID-19 related disruptions would lead to lower iPhone 14 shipments. Since then, Apple's (AAPL) primary iPhone manufacturer, Foxconn, also known as Hon Hai Precision (OTCPK:HNHAF), has undergone worker unrest and dealt with the impact of China's COVID-19 policies, both of which resulted in a sharp drop in November revenue. One month later, Foxconn saw a sharp rebound in December revenue as its key iPhone plant in Shenzhen, China returned to normal operations.
Additionally, China has effectively dismantled its COVID-19 policies that hampered economic growth in the world's most populous country, including the easing of travel restrictions.
A consensus of analysts expect Apple (AAPL) to report quarterly earnings of $1.96 per share and $122.05B in revenue.
In addition to the state of the iPhone and its supply chain, Apple (AAPL) and its management, led by CEO Tim Cook, may give investors insight into the health of the consumer as the global economic outlook continues to weaken and fears of a recession emerge.
Wells Fargo recently cut its 2023 estimates, citing a sharp gain in the stock year-to-date and signs of "increasing consumer demand weakness."
"Overall demand push-out vs. weakening consumer demand ... and uncertainties over the pace of a post-COVID China lock-down recovery leave us with an incrementally cautious stance through 2023ânow [estimate calendar 2023 iPhone shipments] at 216.4M, or -7% [year-over-year], or roughly 10% below consensus," analyst Aaron Rakers wrote in an investor note.
Bank of America analyst Wamsi Mohan, who has a neutral rating and per-share price target of $153 on Apple (AAPL), recently said the outlook for the March quarter could be very weak, perhaps as much as 20% higher than anticipated.
"The tone on the call will be crucial to understand the underlying demand trajectory given the [December quarter] was significantly supply constrained for the higher end Pro models of iPhones," Mohan wrote in a note to clients. 
Mohan added that his iPhone tracker shows that device availability has normalized "and leads us to conclude that demand could be softer than expected in [the first-half of 2023]."
On the bright side, if Apple (AAPL) were to see a re-acceleration in services, due to the improving backdrop for video games and stability in advertising, that would be a "net positive," Mohan added.
Other positives could be a lower impact from foreign exchange, the continued reopening of China and progress on vertical integration, as Apple (AAPL) continues to bring more components in-house, Mohan explained.
Last month, Deutsche Bank trimmed its 2023 estimates for Apple (AAPL) ahead of the iPhone maker's fiscal first-quarter earnings release.