Daily Brief - From Titanium to AI

TLDR: After last night's earnings call, Apple Inc. (AAPL) may be setting the stage for a new era with its generative AI ambitions.

While delivering better-than-expected earnings, Apple did see a dip in iPhone sales, sliding about 10% year-over-year. Yet, the focus of the call swiftly shifted to Apple's AI-driven future, as Cook highlighted significant investments in generative AI technologies.

Apple is also gearing up for its Worldwide Developers Conference (WWDC) in June, where it will reportedly unveil the latest versions of its operating systems. One of the biggest announcements at the show will likely be how Apple will integrate generative AI into its various products.

There are hopes that this could trigger an iPhone sales resurgence, reminiscent of past supercycles, but analysts are skeptical as similar AI technologies haven't yet boosted sales for competitors like Samsung and Google.

With big players like Microsoft, Google, and others already making moves in the generative AI space, Apple's strategic approach to differentiation will be critical. The pressure is on, and the industry is watching closely to see if Apple can translate its AI investments into something that not only matches but exceeds Wall Street's high expectations.

Scenario Spotlight: When Apple beats estimates

The chart above displays the median 1-month response from AAPL stock, based on data from the past 26 instances where the company's earnings exceeded estimates by $0.03 or more.

Market Movers: Historical response from Apple's peers

Here is the 1-month performances of Apple's peers, based on previous earnings beats of $0.03 or more:

1. Netflix: 3.30%
2. Dell Technologies Inc: 3.05%
3. Amazon: 2.58%
4. Alphabet A: 2.16%
5. Microsoft: 1.97%
6. HP: 1.83%
7. Spotify Technology ADR: 1.78%
8. Sony ADR: 1.30%
9. Garmin: 0.77%
10. Sonos: 0.31%

Earnings Spotlight: Expedia drops post earnings

Expedia Group's shares dropped 12% in premarket trading, despite reporting EPS and revenues above estimates, as the company revised its annual growth forecast downward from around 10% to mid-to-high single digits.

This adjustment was due to weaker-than-expected gross bookings and current trends, particularly in its Vrbo segment. Historical data suggests further potential declines in Expedia's stock following significant one-day losses.