Should you buy Apple shares after strong Q2 results?

Apple, Inc. (NASDAQ: AAPL) reported strong second-quarter results last week, and the board of directors declared a $0.23/quarterly share dividend, which represents a 4.5% increase from the prior dividend of $0.22.

Berkshire Hathaway increased its ownership in Apple

Apple reported strong second-quarter results last week; total revenue has increased by 8.6% Y/Y to $97.3 billion, while the GAAP earnings per share were $1.52 ( beats by $0.09).

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Second-quarter results beat expectations, led by strength in the sale of iPhone and all-time high service revenue. Service revenue reached $19.82 billion, while product revenue was $77.46 billion.

Revenue attributed to the iPhone came in at $50.57 billion, up from $47.9 billion in the second fiscal quarter of 2021, due to strong demand for the iPhone 13 lineup.

It is also important to mention that Mac revenue was $10.44 billion, iPad revenue was $7.64 billion, while wearable revenue, which includes the Apple Watch and AirPods, came in at $8.8 billion.

The board of directors declared a $0.23/quarterly share dividend, which represents a 4.5% increase from the prior dividend of $0.22. The quarterly dividend will be payable on May 12 to stockholders of record as of May 09, 2022.

During the second fiscal quarter, Apple repurchased $22.9 billion of its common stock, and the board of directors authorized an increase of $90 billion to the existing share repurchase program last week.

Apple has been aggressively buying its own shares in the last several years, and the company has spent a total of more than $46o billion in the past ten years on share repurchases.

This week, Morgan Stanley reported that second-quarter results prove that Apple should be able to achieve sustained gross margins of 42%+. Morgan Stanley analyst Katy Huberty said:

The decline in depreciation and amortization as a percentage of revenue has led to an average of 125 bps of gross margin tailwinds over the past four quarters, which we believe is structural in nature given Apple’s efforts to accelerate the in-sourcing of key components such as processors, sensors, displays, batteries, and cameras.

Morgan Stanley sees shares of Apple as a buy opportunity, and it is important to mention that Warren Buffett’s Berkshire Hathaway increased its ownership in Apple during the first quarter of the 2022 year.

Berkshire Hathaway has bought $600 million worth of Apple shares in the first quarter of the 2022 year, and the company currently owns about $159 billion worth of Apple shares.

Technical analysis

The current support level stands at $150, while $170 represents the first resistance level. If the price falls below $150, it would be a “sell” signal, and we have the open way to $140 or even below.

On the other side, if the price jumps above $170, the next target could be at $180.

Summary

Apple reported strong second-quarter results last week, and the board of directors increased the quarterly dividend by 4.5%. Morgan Stanley sees shares of Apple as a buy opportunity, and it is important to mention that Warren Buffett’s Berkshire Hathaway increased its ownership in Apple during the first quarter of the 2022 year.

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