Yahoo Finance ETFs to Buy on Apple's Q2 Earnings Beat, Largest-Ever Buyback
Apple Inc. AAPL reported robust second-quarter fiscal 2024 results, wherein it beat estimates on both earnings and revenues. The iPhone manufacturer lifted its dividend payments and unveiled a record share buyback program amid the steep decline in iPhone sales.
Bolstered by the increased dividend and stock repurchase commitment, Apple shares jumped as much as 8% in after-market hours, lifting its market capitalization by more than $160 billion. Investors seeking to tap the strength should consider ETFs having the largest allocation to the tech titan. Technology Select Sector SPDR Fund XLK, Vanguard Information Technology ETF VGT, MSCI Information Technology Index ETF FTEC, iShares US Technology ETF IYW and Vanguard Mega Cap Growth ETF MGK have Apple as the top or second firm with a double-digit allocation and carry a Zacks Rank #1 (Strong Buy) or 2 (Buy).
Apple Earnings in Focus
Earnings per share came in at $1.53, beating the Zacks Consensus Estimate by a couple of cents and increasing from the year-ago earnings of $1.52. Revenues fell 4% year over year to $90.8 billion but edged past the estimated $90 billion. Though revenue was hurt by a sluggish smartphone market and headwinds in China, higher-than-expected revenues demonstrate resilience (see: all the Technology ETFs here).
iPhone sales declined 10% to $45.96 billion, marking the steepest quarterly decline in iPhone sales since the pandemic’s outset. Services revenues, comprising iTunes, Apple Music, iCloud, Apple Pay and Apple Care, rose 14.2% year over year to an all-time high of $23.9 billion. Revenues from Wearables, Home and Accessories, which includes Apple Watch, AirPods, HomePod, Apple TV and Beats headphones, declined 10% to $7.9 billion despite the launch of Vision Pro. Mac sales rose 4% to $7.5 billion, while iPad sales declined 17% to $5.6 billion. Apple is still struggling in China, with sales falling 8% year over year to $16.4 billion.
For the ongoing fiscal third quarter, the iPhone maker expects overall revenues "to grow low-single digits" and iPad revenues to grow in double digits. The company is planning a long-awaited push into generative artificial intelligence. On the earnings call, CEO Tim Cook said that generative AI tools could be coming to Apple products in the near future.
Apple, which is way behind its competitors in adopting AI, is gearing up for significant events that are expected to shape its future trajectory. A media event scheduled for May 7 is anticipated to unveil new iPad models and the annual Worldwide Developers Conference (WWDC), starting Jun 10, is anticipated to provide AI-related announcements and insights into the company’s AI strategy.
The tech giant unveiled the largest buyback in the company's history. It has announced a $110 billion stock buyback plan and raised its cash dividend by 4% to $0.25 per share.
ETFs in Focus
Technology Select Sector SPDR Fund (XLK)
Technology Select Sector SPDR Fund targets the broad technology sector and follows the Technology Select Sector Index. It holds about 65 securities in its basket, with Apple making up 20.5% share. Technology Select Sector SPDR Fund has key holdings in software, semiconductors and semiconductor equipment, and technology hardware, storage and peripherals (read: What "Sell in May"? 5 ETFs That Could Defy the Adage).
Technology Select Sector SPDR Fund is the most popular and heavily traded ETF, with an AUM of $61.7 billion and an average daily volume of 6.5 million shares. The fund charges 9 bps in fees per year.
Vanguard Information Technology ETF (VGT)
Vanguard Information Technology ETF manages $65.2 billion in its asset base and provides exposure to 313 technology stocks. It currently tracks the MSCI US Investable Market Information Technology 25/50 Index. Here, Apple accounts for a 15.4% share. Semiconductors, systems software, technology hardware storage & peripheral, and application software are the top four sectors.
Vanguard Information Technology ETF has an expense ratio of 0.10%, whereas volume is solid at nearly 426,000 shares.
MSCI Information Technology Index ETF (FTEC)
MSCI Information Technology Index ETF is home to 303 technology stocks with an AUM of $9.1 billion. It follows the MSCI USA IMI Information Technology Index. Apple accounts for a 15.4% share in the basket.
MSCI Information Technology Index ETF has an expense ratio of 0.08%, while volume is solid at 247,000 shares a day.
iShares US Technology ETF (IYW)
iShares Dow Jones US Technology ETF tracks the Russell 1000 Technology RIC 22.5/45 Capped Index, giving investors exposure to 131 U.S. electronics, computer software and hardware, and informational technology companies. Apple makes up 15.4% of the assets.
iShares Dow Jones US Technology ETF has an AUM of $15.7 billion and charges 40 bps in fees and expenses. Volume is good as it exchanges 932,000 shares a day.
Vanguard Mega Cap Growth ETF (MGK)
Vanguard Mega Cap Growth ETF offers diversified exposure to the largest growth stocks in the U.S. market. It tracks the CRSP US Mega Cap Growth Index and holds 79 securities in its basket, with Apple accounting for 11.9% of the total assets (read: Should You Buy the Dip in Magnificent 7 ETFs Before Q1 Earnings?).
Vanguard Mega Cap Growth ETF charges 7 bps in annual fees and trades in a good volume of around 317,000 shares a day on average. The fund has an AUM of $18.1 billion.
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Apple Inc. (AAPL) : Free Stock Analysis Report
Technology Select Sector SPDR ETF (XLK): ETF Research Reports
Fidelity MSCI Information Technology Index ETF (FTEC): ETF Research Reports
iShares U.S. Technology ETF (IYW): ETF Research Reports
Vanguard Information Technology ETF (VGT): ETF Research Reports
Vanguard Mega Cap Growth ETF (MGK): ETF Research Reports
