Apple reports results after the bell. Here’s what Wall Street is watching
Apple’s fiscal third-quarter earnings after the Thursday bell mark the next big test for a market struggling to recover from its recent tech crash. Analysts are forecasting earnings of $1.35 a share and revenue of $84.53 billion for the period, according to LSEG. iPhone sales are expected to come in at $38.64 billion, down more than 2% from the same period last year as the company struggles with a period of sluggish growth. AAPL YTD mountain Stock performance this year That makes guidance the most important component of Apple’s print, especially as the company prepares for what some analysts call its most significant upgrade cycle in years this September, driven by new AI features called Apple Intelligence. “We expect iPhone commentary to be the main catalyst this quarter, with upbeat statements on iPhone 16 expectations and continued stability in China likely to drive the stock higher,” said Amit Daryanani of Evercore ISI, who has an outperform rating. “We believe AI features combined with a significant portion of the base for refreshes will drive an iPhone Super Cycle in the December quarter and through fiscal 2025.” Barclays analyst Tim Long, who has a neutral rating on Apple, called September guidance the “key event” that will determine the stock’s performance. He raised his September estimate but kept his neutral rating on the stock due to the recent rally. Long also expressed concern that the new iPhones will not be enough to drive a “meaningful” upgrade cycle to support the high end. “We believe the stock has been bullish in anticipation of a bottom in the iPhone and the upcoming ramp-up of AI features,” he wrote. Apple’s September quarter AI-driven upgrade cycle is expected to include about a week of new iPhone sales. Evercore ISI’s Daryanani said this should help iPhone revenue return to growth. Some analysts say the delayed launch of new AI features will also extend this cycle. Bernstein’s Toni Sacconaghi said the push could bode well for the stock, creating a period of “sustainable growth” versus a period of “digestion” and strong cycles. To be sure, some Wall Street analysts have raised their price targets in recent weeks, citing the AI upside. JPMorgan’s Samik Chatterjee raised his target to $265 from $245 and put a positive catalyst watch on the stock. The adjustment represents an increase of about 19% from Wednesday’s close. He added that the increased revenue from this opportunity will drive full-year earnings revisions and “ease investor concerns around premium valuation multiples.” Baird’s William Power raised his target to $240 from $200 a share, reflecting an 8% increase from Wednesday’s close. He estimates that every additional 10 million iPhone units could add $9 billion in revenue, or 12 cents to his 2025 EPS estimate. “After years of slowing upgrade rates, including new lows for AT&T and Verizon this week, we believe Apple Intelligence can provide a much-needed upgrade catalyst, driving meaningful revenue and EPS growth,” he wrote in a recent note to clients. Wall Street will also be closely watching sales in China after an 8% decline in the second quarter. Analysts warn that continued losses in China to Huawei could hurt iPhone revenue. “While sales in Greater China remain sluggish, iPhone sales in Greater China were stronger than expected and we are encouraged by the increased demand for iPhone in emerging markets,” said Raymond James analyst Srini Pajjuri.
