AAPL Stock Weekly Outlook: Apple unveils Q3 numbers, increases R&D and more

Apple unveils third quarter earnings.

Apple (NASDAQ: AAPL) released its third quarter results shortly after the closing bell on Tuesday. Share prices proceeded to plummet nearly 7% in after hours trading (the drop off actually began shortly before the earnings call) even though it was yet another record breaking quarter for the Cupertino giant. After closing Tuesday at $130.75, prices opened Wednesday at $121.99. They recovered a little bit during large volume trading on Wednesday, closing at $125.22, and closed the week at $124.50. Stocks likely fell because sales numbers didn't meet Wall Street's many bullish estimates. Analysts have largely maintained their ratings and target prices, though some of the loftier ones have been tempered (FBR Capital, for example, lowered its target to $175 from $185 but maintained an "outperform" rating), and many see this as an opportunity to buy.

Apple saw net profit of $49.6 billion and $10.7 billion ($1.85 per diluted share) respectively, and a gross margin of 39.7% during the record third quarter. These numbers compare to $37.4 billion, $7.7 billion and 39.4% in the year ago quarter. International sales accounted for 64% of the quarter's total, and revenue from China surged 112% year-over-year to $13.2 billion. Apple's services (App Store, Apple Music, iCloud, etc.) reached an all time record revenue.

IDC research shows that Apple's successful quarter helped it gain market share versus chief rival Samsung. According to the analysis, Apple now holds 14.1% global market share, up from 11.7% this time last year, while Samsung dropped from 24.8% to 21.7%.

Although no official numbers were released during the earnings call, analytics firm Canalys estimates that Apple shipped 4.2 million Apple Watches in the June quarter. If accurate, this would put it ahead of FitBit as the most popular wearable on the market.

According to some SEC filings, Apple has decreased it capital expenditure by $1 billion to $12 billion. It was able to do so because of increasingly efficient manufacturing capabilities. At the same time, the company has increased its research and development budget with an additional $1.5 billion so far this fiscal year.

Fortune released its annual Global 500 list last week, and Apple maintained its position at #15. The publication highlighted the fact that Apple stock gained 40% in 2014 and the company added $200 billion to its market value, thanks to record iPhone sales and new product categories like Apple Pay and the Apple Watch.

Apple also revealed in its earnings call that it now has $203 billion in offshore cash on hand. This comes at a time when there is bipartisan agreement in Congress to overhaul the tax code for multinational corporations in effort to bring some of this cash home.