Summary

• Musk's new company called Neuralink aims to develop brain-machine interfaces.
• Neuralink has created implantable devices to record & stimulate brain activity.
• The devices are still in the experimental stage and haven't been tested on humans yet.

Analysts anticipate that Apple will announce its first year-over-year revenue decline since the March quarter of 2019 when it reports its earnings on Thursday. Several factors are contributing to the decline, including a shutdown of Apple's main assembly facility in China during the Covid lockdowns, which resulted in the company's inability to produce enough high-end iPhones.

In November, Apple issued a rare warning to investors that production problems would lead to lower shipments than expected, causing many analysts to reduce their estimates. According to Refinitiv, analysts expect Apple to report revenue of just over $121 billion for the December quarter, which would be a slight decrease from its revenue of $123.9 billion in the same quarter a year ago.

However, the decline is not unique to Apple as the smartphone and PC markets are also experiencing a slump due to a decrease in sales during the pandemic and cost-cutting measures in preparation for a potential recession.

In the fourth quarter, the smartphone market saw an 18% decline in shipments, the worst decline ever recorded by market research firm IDC, while the PC market fell 28%. Despite this, many investors believe that Apple is outperforming its competitors even in a contracting market.

Investors are eager to know whether the shortage of iPhone 14 Pro models in the December quarter will drive demand in the March quarter, now that supply has improved. Analysts expect sales of just over $98 billion in the March quarter, indicating slight year-over-year growth. However, the consumer electronics market remains challenging with tablets, PCs, and other discretionary products facing continued demand headwinds. If consumer confidence is impacted by rising interest rates and declining savings, Apple may report a slow March quarter. Analysts expect cautious commentary from the company regarding product demand across the board.

Investors may want to look at Apple's services business, which is profitable and has been growing consistently, for a silver lining. Services are expected to total $20.67 billion in the December quarter, reflecting a 5.9% growth rate. The App Store, one of the largest components of services, saw a significant slowdown in growth in the fourth quarter, although the severity is a topic of debate among analysts. However, if services such as Apple TV+ and Apple Music continue to generate a higher percentage of Apple's revenue, the company's shares could rise.

Analysts will also monitor the impact of the strong dollar on Apple, as much of its sales come from overseas. During the December quarter, the British pound, the Canadian dollar, and the Japanese yen all weakened compared to the dollar, and Apple management has stated that the strong dollar will be a 10 percentage point drag on sales growth.