Investors have continued to flock to Apple (NASDAQ:AAPL) shares. The company reported impressive March quarter earnings numbers and boosted its stock repurchase program. At $316 at Thursday’s closing, Apple shares have gained about 10% since the March quarter earnings report on April 30.
Here are three things that investors buying Apple shares need to know.
Apple shares and the iPhone business
According to CNBC, Apple’s iPhone sales in China bounced back big in April following slumps in January and February. Apple shipped 3.9 million iPhones in China in April—160% more than the March shipment. The low-cost iPhone SE boosted the company’s China sales last month, according to the CNBC report.
Apple shares tend to track the performance of the company’s smartphone business. iPhone sales contribute to most of the revenue.
Moving device production from China
Apple plans to shift its device manufacturing from China to other countries. For example, Apple has tapped manufacturers in Vietnam to produce its forthcoming headphones. The company will also move some iPhone production to Vietnam. Apple might move a significant portion of its iPhone production from China to India.
The production shift could bode well for Apple shares amid rising US-China tensions. The coronavirus pandemic appears to have renewed the friction between the two countries. Recently, President Trump moved to curtail Huawei’s access to US technology. As a result, China threatened to retaliate. Huawei is one of China’s technology champions.
Besides President Trump’s action, the Senate passed legislation this week that could lead to a ban on trading shares of Chinese companies in the US. Alibaba shares dropped after the China oversight legislation passed.
Doubling down on the services business
According to Bloomberg, Apple wants an executive to oversee the production and acquisition of original podcast content. The search for the original podcast head comes after Spotify inked an exclusive podcast deal with Joe Rogan. The US podcast market holds a $1.0 billion revenue opportunity.
Providing podcast content is part of Apple’s services business. The company counts on the services business to diversify its revenue source beyond iPhone sales. If the efforts are successful, the iPhone business might not weigh heavily on investors’ perception of Apple shares.
At this point, Apple shares have about a 17% upside potential to the highest Wall Street target price at $370.