Records tumble as Apple keeps up momentum

After a stunning year, record results give another boost to the soaring Apple share price.

Apple Inc (NASDAQ:AAPL) had no trouble meeting the lofty expectations of investors last night as Wall Street's most valuable company produced record results following its Christmas quarter.

Stronger-than-expected iPhone sales drove the 9% jump in revenues to $91.8 billion in the three months to December 28, with the resulting 19% rise in earnings per share to $4.99 also an all-time high for the California-based company.

Shares lifted 1% in after-hours trading to $322 as Apple continues to attract buying interest, despite a year in which it has doubled in value to a market-leading $1.4 trillion.

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Apple was the best performing of the FAANG stocks last year — Facebook Inc A (NASDAQ:FB), Amazon.com Inc (NASDAQ:AMZN), Netflix Inc (NASDAQ:NFLX) and Google owner Alphabet Inc A (NASDAQ:GOOGL) — and has captured the imagination of interactive investor clients in recent weeks as the second-most bought stock in the first part of January.

Their faith was rewarded last night, with Apple easily beating Wall Street first quarter forecasts for revenues of $88.5 billion and earnings of $4.54 a share. Morgan Stanley also noted that guidance for the current quarter's gross profit was 5.5% ahead of consensus.

With Apple's trading performance still robust, the biggest uncertainty appears to be the potential impact of coronavirus. China is the company's third largest market with sales of $13.6 billion in the most recent quarter, with the majority of Apple's suppliers based in the country.

Analysts warned of the potential for increased volatility in Apple's share price in the coming months, particularly if the outbreak spreads to larger cities in China. Longer term, however, it's likely that any shortfall in demand will merely shift to subsequent quarters.

The situation has not prompted Morgan Stanley to alter its target price for shares of $368, while the bank has increased its estimate for 2020 earnings per share by 8% to $13.55.

Apple's strong Christmas quarter owes much to the iPhone 11 series, which was unveiled in September with features including the first triple lens camera and a longer battery life. A lower priced iPhone is also due to launch in March, followed by a 5G-enabled device later in the year.

These products are expected to sustain iPhone growth throughout 2020, particularly after the fast-start in the most recent quarter saw revenues beat Wall Street forecasts by 8%.

There had been concerns last year about waning demand for the iPhone, given that customers had been taking longer to replace their handset as innovation slows. Apple has looked to offset any potential slack by capitalising on an user base of 1.5 billion active devices.

These services includes Apple Music, Apple Pay and now Apple TV+, with the streaming service launched in November as a rival to the likes of Netflix and Amazon Prime. The benefits won't be realised for some time as Apple will initially focus on building viewing figures through the offer of a free one-year subscription to anyone buying a new Apple device.

Services revenue of $12.7 billion was a new quarterly record but came in below Wall Street forecasts. Apple hopes the division will achieve sales of at least 50 billion this year.