Hello everyone.

In today’s update, we will focus on Apple’s 3Q23 earnings Q&A session with analysts. After recapping each question-and-answer exchange that occurred on the call between Apple and sell-side analysts, we will go over my thoughts / response to the exchange. Let’s go beyond what was talked about on the call.

NOTE: The following earnings call questions (“Q (Sell-Side Firm)”) and answers (“Cook” or “Luca”) have been cut, summarized, paraphrased, and rearranged for clarity. To read the full question and answer exchanges, Seeking Alpha offers a written transcript here.

Reading Between the Lines of Apple’s 3Q23 Earnings Q&A With Analysts

Consumer Behavior

Q (Morgan Stanley): How is the consumer behaving today versus 90 days ago? Are there geographical differences?

Cook: Emerging markets was a strength. China saw acceleration. Europe saw a record for the June quarter. There are “some really good signs in most places in the world.” The smartphone market remains challenging in the U.S.

My response: The going theory for why the U.S. has been the outlier in terms of iPhone weakness is that economic anxiety (higher inflation and rates) combined with consumer behavior shifts (budget shift to services, leisure, eating out, and travel) have strained the appetite for consumer electronics. It also should be pointed out that the U.S. has one of, if not the highest, iPhone sales share in the world. There are fewer people in a position to switch to iPhone.

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