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What The Decline In Q1 PC Shipments Say About Apple Stock

IDC has reported that PC shipments declined in Q1, after two strong years of demand. Could this spell trouble for Apple and its stock?

The party could be finally over. According to research company IDC, PC shipments fell in the first quarter of 2022 after two years of strength driven by the pandemic-related increase in demand for tech devices.

Could this piece of data anticipate a deterioration in Apple’s  (AAPL) - Get Free Report financial results, starting with the company’s fiscal Q2 to be reported in only a couple of weeks? Today, the Apple Maven tries to answer this question.

Figure 1: What The Decline In Q1 PC Shipments Say About Apple Stock

Figure 1: What The Decline In Q1 PC Shipments Say About Apple Stock

(Read more from the Apple Maven: 3 Interesting Facts About Apple Stock In Q1 2022)

PC sales: what happened

IDC has reported that global shipments of traditional PCs fell by more than 5% in the first three months of the new year. To be fair, the decline was widely expected — yet it breaks a trend of double-digit growth seen in the past two years.

The research firm helped to interpret the data by suggesting that a slowdown in shipments should not cause much of a concern.

First, the 80.5 million PCs shipped during the quarter still look impressive compared to the pre-pandemic era. For instance, the comparable period in 2019, only three years ago, saw shipments of only 58.5 million — 27% lower than current levels.

Also, IDC pointed out that Q1 performance was heavily impacted by supply chain disruptions and a geopolitical crisis. Considering these challenges, a drop of only 5% compared to an atypically robust 2021 could be perceived as encouraging news about demand strength.

How Apple has performed

Even though PC sales in general have hiccuped at the start of 2022, the same can not be said about Apple’s shipments.

IDC reports that the Cupertino company posted YOY growth of more than 4% in Q1. Worth noting, the modest increase was on top of outstanding 112% growth in the comparable quarter of 2021. Apple now has nearly 9% market share vs. less than 7% three years ago.

The chart below shows how Apple’s Mac sales have skyrocketed in the past several quarters, beginning with the quarter ended June 2020 — i.e., shortly after the start of the pandemic.

Figure 2: Apple's Mac sales growth.

Figure 2: Apple's Mac sales growth.

What it means for Apple stock

In my view, Apple’s 4% shipment increase in the most recent quarter should be seen as a positive, given the context above.

It has become increasingly clear that demand for the M1-powered devices has been strong. Apple is proving that it can perform much better than its competitors whether the sector-wide trends are positive or negative.

In any case, I also believe that the Mac is only a small (but nonetheless important) piece of Apple’s business. In fiscal 2021, despite the impressive growth in the segment, Mac still accounted for only 9.6% of total revenues.

Therefore, I would only worry about PC shipments declining if (1) the drop persists over a period of a few consecutive quarters and (2) softness in PC spills into weak demand for smartphones and services that depend on tech device usage, including Apple Music and App Store.

Ask Twitter

In Q1, PC shipments fell 5% after two strong years of demand, according to IDC. Apple, on the other hand, saw Mac shipments rise a modest 4%. How do you interpret these numbers?

(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting The Apple Maven)