Apple shares climb 3% ahead of key earnings on Thursday

Tim Cook, chief executive officer of Apple Inc., at the China Development Forum 2024 in Beijing, China, on Sunday, March 24, 2024. Picture: Lucille Liu/Bloomberg via Getty Images

Apple shares climbed 3% ahead of key earnings this Thursday night that investors hope will dispel many questions facing the iPhone giant including losing momentum in the key Chinese market and increased regulatory scrutiny from the European Union.

The gain added billions of dollars and lift the stock market valuation to almost $2.7tn (€2.5tn) was welcome news after Apple shares have lagged the gains of other US tech titans this year, including Microsoft and Google-owner Alphabet that have successfully whetted investors’ appetite for the potential for lucrative artificial intelligence products and services. Apple shares have nonetheless shed 5% since the start of the year.

The latest test for Apple came on Monday when the EU Commission decided to extend to its scrutiny beyond the iPhone to Apple's Mac by way of the new legislation under the Digital Markets Act, or DMA.

The company’s iOS mobile operating system, its App Store, and Safari browser are already targeted by the law — but Apple has challenged its designation for certain services to the EU’s General Court in Luxembourg, with hearings set to take place later this year.

The EU’s decision to draw iPad under the scope of the DMA will ensure that fairness and competition are preserved, EU competition commissioner Margrethe Vestager said in a statement. She said that despite not meeting all the thresholds for being earmarked, an investigation showed that “iPadOS constitutes an important gateway on which many companies rely to reach their customers".

Meanwhile, like other US tech giants, Apple is navigating a series of difficult challenges over its production and sales of iPhones in China, even as it attempts to plan for any worsening in the trade skirmishes between Joe Biden's White House and Beijing.

On sales, the iPhone has been losing market share in what is a key market to Chinese local rivals, including a rejuvenated offering from Huawei.

The fortunes of Apple, Google, and Microsoft, as well as Meta, which owns Facebook and Instagram, are closely watched in Ireland, not only for the up to 15,000 people they directly employ here, but for the unspecified billions of euro they contribute by way of corporation tax receipts to the Government's coffers.

Apple's latest quarterly report on Thursday will be an opportunity for many here to take a reading of the Big Tech firms. A slew of earnings last week showed a mixed set of results: Google-owner Alphabet and Microsoft delivered reassurance to investors that the billions of dollars they will invest in artificial intelligence products and services will pay off for investors. Chipmaker Intel shares have only gained 5% from a year ago as it looks to produce AI-chipsets for its customers.

Complicating matters is the question surrounding whether the US Federal Reserve will be able to cut US interest rates this year, even as US inflation is still running at a hot pace. Big Tech shares tend to benefit from lower borrowing costs.

Shares of Alphabet and Microsoft fell on Monday, but have nonetheless climbed 5% and 32%, respectively, from a year ago, bolstered by the AI promise.