iPhone trends in China are 'much, much better' than what people feared, says BofA’s Wamsi Mohan

Apple shares are up this morning, rising nicely up almost $11.00. The company reported though a 10% drop in iPhone sales. That’s about what was expected. Also announced plans to buy back $110 billion of its stock, the largest in corporate history. Not just Apple joining us now, Senior IT Hardware Analyst at B of A Securities Wamsi, Mohan at Wamsi. The at least the what’s being written today is that the, the results even though there were some negative numbers in terms of growth that they were better than what the street was expecting in general. Same for for what you were expecting. Yeah. Joe, thanks for having me on. Look, I I think that it’s really interesting to see these results because first of all, I think they delivered on everything that people could have asked for, right for On China, there were a lot of fears going into the quarter on China. Frankly, we did not see any evidence of order cuts in the supply chain which we were calling out all quarter long that we have not seen these order cuts despite all these China fears. And sure enough, Apple actually announces that they grew iPhone sales in China. So I think that’s the first thing that people got wrong. The second thing was gross margins were quite strong, right? Third thing, buyback was up massively. And lastly when you think about generative AI, they did drop these tea leaves that look there’s a lot coming over here. So really in some ways a much, much better than expected sort of result and guidance. So the the buyback is partly responsible the size of it you think for the the gains today, I think the buyback helps, but I think that that’s not really the driving factor. I think that the two main concerns going into the print was that the China market was deteriorating very rapidly. We’ve all seen the headlines around how much unit sales could have gone down in in March and they were deteriorating into the June quarter. Frankly, when we spoke with the company yesterday, they said not only did they grow in China, that was on top of like an unadjusted 5 billion supply chain headwind that they faced in the year ago quarter. So notionally they actually grew faster and absorbed a three-point currency headwind. So the trends in China for iPhone are actually much, much better than what people feared and I think that’s the number one reason why the stock is doing what it’s doing. And then secondarily, I would say, you know, people were hoping to hear something around generative AI because there’s been this narrative that Apple’s really, really behind. They’re going to be one of these laggards. It’s really put into the AI loser bucket. And I think that notion is rapidly changing, right. Like I think Tim Cove addressed on the call yesterday, very clearly that they’ve got a lot of exciting products to come. They will fully be involved in generative AI because of their expertise in being able to integrate the hardware, software and services altogether. So we really think that these are the two main reasons why the stock is moving up 90 billion versus 110 billion. Yes, I mean it’s a huge number. Obviously, it’s always been a huge number. Yeah. In terms of like the incremental share count decline even it doesn’t actually matter that only 2020 billion more.