Apple: The China Revenue Decline That No One Realizes Is Bullish (Archive)

This 5-Minute Pitch was originally published on Seeking Alpha before the launch of the Hunting Alphas website. It is shared here to showcase my previous work and track record. New 5-Minute Pitches published on this site will not be disseminated anywhere else.

Elevator Pitch

• Apple's China revenues fell 11% YoY. But contrary to what you may think; it does not spell weak demand in that region. In fact, China demand is stronger than expected.
• Product and iPhone sales have been stagnant for the past 3 years. The iPhone 16 Series launch missed estimates in the holiday season.
• But with a huge and still-growing installed base of products, AAPL is enjoying steady and robust double-digit growth in service revenues at double the gross margins vs. the product business.
• The stock trades at a 25% premium vs. history on a 1-yr Fwd P/E basis. But I think the bullish fundamentals make it worthwhile. Relative technicals vs. SPX are also bullish.
• Insourcing in 2025 is a key catalyst for product gross margin expansion.

Read the full article here.