Apple Eyes Best June-Quarter Sales Surge in Half a Decade

Apple (NASDAQ:AAPL) has managed to buck the global smartphone shipment slump by holding iPhone prices steady, leading to what analysts predict will be its strongest June-quarter sales growth in the past five years. While competitors hiked prices under pressure from rising chip costs and supply chain strains, Apple's steady pricing helped lift iPhone shipments by 3% in the quarter.

With the smartphone market sinking to a 13-year low, Apple's market share in smartphones has inched up to nearly 20%, a notable feat credited largely to its pricing discipline and robust ecosystem. This approach also helped Apple briefly reclaim its status as the world's most valuable firm, nudging its valuation over the $5 trillion mark for the first time since losing that spot to Nvidia two years ago.

The company did increase prices for iPads and MacBooks last month to offset memory and storage chip shortages driven by burgeoning AI datacenter investments. However, the flagship iPhone remains untouched for now, hinting at a tactical choice to protect its cash cow product line despite rising costs elsewhere.

Industry watchers note that Apple's reluctance to dive deep into AI infrastructure spending like other Big Tech players might be paying off. Investors are apparently skeptical about hefty AI investments translating into returns, so Apple's leaner approach looks attractive in comparison.

Economists expect Apple's revenue for the April-June period to hit roughly $108.65 billion, reflecting a 15.5% jump - the best third-quarter sales growth since 2021. Profit growth may soften somewhat as gross margins slip from 49.3% to an estimated 47.9% compared to the previous quarter.

The growth is primarily driven by iPhone sales, projected to surge 20.8% this quarter, also marking its strongest showing since 2021. Meanwhile, Mac revenue is expected to pick up momentum too, increasing by around 8.7%, despite recent price tweaks. iPad sales might slow, dipping a bit to 5.2% growth from 8% in the prior quarter.

Some analysts argue that Apple's core gadget demand displays a surprising level of price inelasticity, especially for iPhones, which means moderate price adjustments may not significantly dent sales volumes. This tends to shield the company from supply-side issues affecting peers as well.

That said, there's talk that Apple could raise iPhone prices with its next product launch, typically scheduled for September. It also recently bumped prices on its services like Apple Music and Apple One bundles, signaling cautious testing of consumers' price tolerance.

With Apple's valuation remaining on the high side, the room for missteps appears narrow. The market will soon get a clearer picture as the company reports its full quarterly earnings and reveals whether the pricing strategy can stay intact amid cost pressures.