Equity Update: Apple, Vodafone, Diageo…

Vodafone’s upbeat update masks deeper challenges

Mark Crouch, market analyst at investment platform eToro, says: “After enduring their fair share of disappointment, Vodafone investors were treated to an upbeat trading update this morning as the telecoms giant looks to break free of the “one step forward two steps back” performance that has plagued the business in recent years.

“Internal cost cutting coupled with sales of underperforming assets mean Vodafone has boosted revenues while maintaining generous shareholder returns. However the mammoth task facing the company is by no means complete. With so much being pinned on a merger with Three UK, which has at last been given the green light, it is perhaps not surprising that investors haven’t poured in to invest, underlining the issues still facing the company.

“Whether or not the deal goes through. Challenges remain for Vodafone. Unable to simply raise prices to prop up the balance sheet – something they’ve learned the hard way in Germany with declining customer numbers – Vodafone will need to come up with something other than asset sales and price hikes if they are ever to recapture their former glory.”

Tariffs wreaking havoc with Diageo’s plans

Adam Vettese, market analyst at investment platform eToro, says: “Not even the spectacular popularity of Guinness which saw nationwide shortages over Christmas has been able to lift the tone of what is a very cautious update from Diageo. Despite revenue coming in slightly ahead of forecast, the spectre of tariffs looming is a far bigger priority with the company particularly exposed. Bosses will be hoping for some kind of US-Mexico accord given they imported $1.6billion worth of tequila into the states last year.  The fact the firm has withdrawn any medium-term forecasts based on the potential impact of tariffs really demonstrates the gravity of the situation. Diageo has said they will take measures to try and mitigate the impact of tariffs, but realistically there’s a limit to what cost-cutting and inventory management can do when faced with such a mammoth additional expense.

“Shares dipped yesterday when the tariff news hit the market and have struggled in general over the last 12 months. The price is close to revisiting lows last seen in October which to put in perspective was only slightly above where shares traded during the height of the pandemic. While this may seem like a chance to pick shares up on the cheap, if the mooted tariffs do come into force then it’s difficult to bet against the price falling even further in the interim.”

Mixed results for Apple as challenges persist

Josh Gilbert, market analyst at investment platform eToro, says: “Apple’s woes continued in 2025 with a mixed quarter. They announced record quarterly revenue alongside record services revenue, but disappointments came from iPhone sales and China.

“Revenue from China fell 11% to USD$18.5 billion in the quarter, well below estimates of USD$21.6 billion. This will only spark concerns from investors that Apple continues to struggle in China as competition intensifies. They have yet to provide shareholders with any sign of a turnaround in a key region, which will continue to be a worry.

“On the other hand, Apple’s new AI platform, Apple Intelligence, didn’t bolster iPhone sales in the way the market would have been hoping for. Apple has been behind the curve on AI for a while, with tech competitors ahead in this key race – right now, Apple Intelligence users aren’t getting the compelling experience consumers can get from other AI products.

“There were some positives, Apple’s services revenue was a huge bright spot that investors should watch. Revenue rose to a record USD$26.3 billion in the quarter, up 14%, driven by in-app purchases through the App Store and other areas such as iCloud and Apple Music. This is a key area for the business, growing at a solid clip with high margins. iPad and Mac sales also delivered year-over-year sales increases.

“Ultimately, investors don’t have a very shiny Apple right now. Its flagship revenue driver, the iPhone, missed sales estimates, showing that its Apple Intelligence features and demand weren’t enough to guide Apple back on the right path. Tim Cook and his team need a big 2025, driving iPhone sales again and doing what they can to stem the bleeding in China. Its optimistic revenue forecast for the second quarter has also provided some positives that investors can take away.”

ECB cuts rates as expected to boost growth in the region

Lale Akoner, Global Market Analyst at investment platform eToro, says:  “As anticipated, the ECB has reduced interest rates by 25 basis points, lowering the policy rate to 2.75%. This decision follows recent Eurozone GDP data revealing stagnation in the fourth quarter, driven by Germany’s ongoing manufacturing slump, election-related uncertainty, sluggish domestic demand, and lingering trade tensions.

“We anticipate further policy easing as growth concerns persist. However, the speed of additional rate cuts will largely depend on how quickly wage and services inflation moderates. Uncertainty remains high, given the unclear impact of Trump’s tariff agenda on the region. Looking ahead, we believe investors will be increasingly focused on the risk of renewed stagflation concerns in 2025.”

Eurozone Inflation Picks Up, Raising Stagflation and ECB Policy Risks

Lale Akoner, Global Market Analyst at investment platform eToro, says: “Eurozone inflation accelerated to 2.5% in January from 2.4% in December, as core inflation was higher than expected at 2.7% and services inflation dipped slightly. We continue to think that still-present inflationary pressures and the threat of trade war escalation will likely slow down the pace of rate cuts by the ECB.

“Most importantly, for the next policy move, the ECB will have to continue monitoring wages as they are highly correlated with services inflation. Overall, policy uncertainty remains high as the region’s growth is already stagnating and tariffs add to stagflation concerns.”