Apple's earnings beat on AI-driven chip demand lifted semiconductor stocks, confirming supply-chain strength. The readthrough points to a multi-quarter build cycle for M4 processors.
Apple's latest earnings report, released Thursday, showed a 6% revenue beat driven by stronger-than-expected iPhone sales and a surge in services revenue. The company's AI-related chip orders, particularly for its upcoming M4 processors, have been ramping up, according to supply-chain checks by multiple analysts.
The readthrough was immediate. Shares of chip suppliers NVIDIA and AMD rose 3% and 2% respectively in after-hours trading, while contract manufacturer TSMC added 1.5%. The gains suggest investors see Apple's AI push as a catalyst for the broader semiconductor supply chain.
"Apple's AI spending signals that the consumer side of the AI cycle is real," said a trader at a New York-based hedge fund. "The supply-chain readthrough is clear: if Apple is ordering more, the foundry and packaging companies benefit."
Apple's own stock rose 2.8% after hours. The company's services division, which includes the App Store and Apple Music, posted a 12% revenue increase, helping offset a slight decline in Mac sales. CEO Tim Cook said on the call that Apple's AI investments are "laying the groundwork for the next decade of innovation."
The sector readthrough extends beyond chipmakers. Suppliers of memory, display panels, and camera modules also saw gains. Skyworks Solutions, which supplies wireless chips for iPhones, rose 1.8%. The positive readthrough for the sector is uncommon outside of a major product cycle, analysts said.
One risk: Apple's capital expenditure outlook remains cautious. The company guided for flat to slight growth in capex, which could temper enthusiasm for equipment suppliers. Still, the order ramp for M4 processors suggests a multi-quarter build cycle.
For investors tracking the AI supply chain, the Apple print adds weight to the thesis that consumer AI adoption is accelerating. The next catalyst is the September iPhone launch, where the company is expected to unveil its first AI-focused smartphone features.
Apple's CFO said the company would provide more detail on its AI strategy at the next developer conference in June.
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