Apple Inc. (AAPL) is set to report its fourth-quarter earnings on October 31st, and a Goldman Sachs analyst is optimistic about the company’s performance. Analyst Michael Ng, who holds a Buy rating on Apple with a price target of $275, believes the tech giant will surpass earnings expectations in the short term.
Ng projects earnings per share of $1.61 for the quarter, surpassing the Wall Street consensus of $1.57. He also forecasts revenue of $94.5 billion, exceeding the consensus estimate of $93.6 billion.
The analyst cites several factors contributing to this bullish outlook. One key driver is the continued demand for older iPhone models. Ng points out that even with the release of the new iPhone 16 series, older models remain popular, contributing to Apple’s revenue stream. He also notes that the demand for the iPhone 16 series, while possibly not as strong as initially anticipated, has remained relatively stable year-over-year, exceeding initial concerns.
Looking ahead, Ng sees Apple’s foray into artificial intelligence (AI) as a long-term demand driver. While Apple has adopted a cautious approach to the rollout of Apple Intelligence, Ng believes the exclusive features available on the iPhone 15 Pro/Pro Max and the 16 series will entice users to upgrade their devices.
Furthermore, Ng remains positive about Apple’s services segment, which he sees as a major strength for the company. Despite acknowledging that product revenue growth has slowed, Ng argues that the market underestimates the enduring power of the Apple ecosystem. He believes that Apple’s growing installed base, the secular growth of its services, and the introduction of new products will effectively counterbalance cyclical headwinds affecting product revenue.
The analyst also highlights Apple TV+’s recent decision to shorten theatrical release windows, opting for a faster rollout to streaming. This strategy, Ng believes, is driving Apple TV+ subscriptions and contributing to the overall strength of Apple’s services segment.
With a combination of factors, including robust demand for its products, a burgeoning AI strategy, and a thriving services ecosystem, Goldman Sachs analyst Michael Ng remains confident in Apple’s ability to deliver strong fourth-quarter results.