Why Apple is ‘no different than Rocky’ ahead of earnings: Dan Ives

Wedbush Securities Senior Equity Research Analyst Dan Ives to discuss tech earnings expectations, Apple, consumer sentiment, tech layoffs, and the outlook for tech.

Video Transcript


BRIAN SOZZI: All right, let's stay on the bizarre here and move off of mullets. Apple could be a key catalyst in the days to come. Let's look ahead to what our next guest calls the "Tech Super Bowl of Earnings". Wedbush Senior Analyst Dan Ives joining us now.

Dan, always a great way with words. What do you expect from Apple when they report? We're talking about this has been a bizarre earnings season so far. Could we see a disappointment from Apple on iPhones and guidance, but the stock still goes up?

DAN IVES: Yeah. Look, I think that's been the theme, just like Microsoft. And I think Tesla as well, right? In terms of just this narrative. I think with Apple, demand is holding up better than fear.

I mean, that's what we've seen coming from Asia. Shortages clearly with the issue December quarter. There will be some cautionary comments from Cook, but I view it as a positive catalyst. Because right now, The Street is sort of fearing what ultimately Cook's going to say and I believe the demand story and iPhone 14 Pro holding up better than expected.

BRAD SMITH: So what is this going to tell us about the consumer right now or even the consumer going forward in the next quarter, and perhaps even for the back half of this year?

DAN IVES: Look, I think it shows a stronger consumer than I think many would have thought where we'd be today. I think, look, the biggest issue with Apple is they have a golden install base almost right now, a billion iPhones and about over 20% of them have not upgraded their iPhones. So you have 220, 230 million iPhones haven't been upgraded in 4 plus years.

That gives them unique, and I think, almost Rock of Gibraltar-like ability to navigate this storm. And I think many have counted Apple out many, many times. No different than Rocky, and I think Cook is going to sort of flex the muscles Thursday night, along with the rest of tech, and that's our view. It's going to be a positive week for tech, despite many fearing.

JULIE HYMAN: Rock of Gibraltar to Rocky.

BRIAN SOZZI: This guy's on fire.

JULIE HYMAN: The analogies come in fast and furious here, Dan. If we take a step back for a second and just go to the theme of what Soz talked about in his note, this sort of, I don't know, bizarreness, right, of this rally we've seen this year, what are you hearing in your discussions with clients? Are they sort of still confused, unsettled, uncertain in this market about some of the price action we've been seeing?

DAN IVES: No, Julie. I mean, I tell you, after these conference calls, phones lighten up because investors sometimes can't understand the price action even the next day. I think Microsoft is a perfect example.

But my view is tech stocks, institutionally, is probably as under-owned as I've seen since 2009. So no one's positioned for this sort of bad news that's priced in. That's what we've seen from Netflix to Microsoft to ServiceNow, and of course, to Tesla, which I think is the short covering for the ages.

And that narrative, I think, is going to play out this week. Tech firms are cutting costs have to spend the 1980 rock stars the last four to five years. And once Wall Street sees numbers are sort of lower, then you could buy these stocks.

BRIAN SOZZI: Dan, do institutions want to see layoffs from Apple?

DAN IVES: Well, first of all, Apple never hired at the pace of these other tech giants. You'll see cost cutting around the edges, but Cupertino, I mean, they're tacticians. That's why they never had that sort of, what I almost call that pandemic wave that many of these tech firms are hiring about 15% to 20% more workers per year. They'll cut around the edges, but I think it just shows why Cook is the Hall of Fame CEO. And I think he's able to navigate another situation here in terms of not needing to do the layoffs that other tech firms have done.

BRIAN SOZZI: And you, Dan Ives, are a Hall of Fame analyst. Dan Ives from Wedbush, always good to see you, my friend.

DAN IVES: Thank you.

BRIAN SOZZI: We'll talk to you soon. Appreciate it.

DAN IVES: Great to see you.