Apple Inc. (AAPL) is gearing up to report its fourth-quarter financial results after the market closes on Thursday, and investors are eagerly awaiting insights into the performance of the iPhone 16, the company’s burgeoning AI ventures, and its standing in the crucial Chinese market.
According to data from Benzinga Pro, analysts are projecting revenue of $94.56 billion for the quarter, a substantial increase from the $89.5 billion reported in the same period last year. Notably, Apple has consistently surpassed revenue estimates for six consecutive quarters and nine out of the last ten. Similarly, earnings per share are expected to reach $1.53, marking an improvement over last year’s $1.46. Apple has maintained a track record of exceeding earnings per share estimates for the past six quarters and nine out of the last ten.
The upcoming earnings report and conference call are anticipated to shed light on the performance of the iPhone 16. While Goldman Sachs analyst Michael Ng acknowledged that iPhone 16 demand has remained relatively stable year-over-year and better than anticipated, he emphasized the potential for Apple’s AI advancements, particularly Apple Intelligence, to act as a long-term demand driver. Ng reiterated a Buy rating on Apple with a $275 price target.
Analysts are also keeping a close eye on Apple’s Services segment, which Ng believes could be underestimated by investors. He argues that Apple’s expanding installed base, the inherent growth in services, and continuous product innovation should offset potential cyclical headwinds to product revenue, such as reduced iPhone unit demand due to lengthening replacement cycles and diminished consumer demand for PCs and tablets.
Morgan Stanley analyst Erik Woodring raised concerns about shorter lead times for the iPhone 16, potentially signaling weaker demand for the latest model. However, he remains optimistic, suggesting that the data, while unfavorable for the iPhone 16, could be an improvement compared to the previous iPhone 15. Woodring attributed the shorter lead times to Apple’s proactive efforts in maintaining inventory levels to avoid supply constraints, highlighting the company’s commitment to smooth supply chains. He holds an Overweight rating on Apple with a $273 price target.
Beyond the iPhone 16, investors will be closely observing the performance of Apple’s Services segment, the initial rollout of Apple Intelligence, and the company’s performance in China. While Services revenue reached an all-time high in the third quarter, it fell short of market expectations. The third-quarter weakness in China contributed to downward pressure on Apple’s share price following the earnings release. Apple’s recent AI product announcements are anticipated to be highlighted as future catalysts in the upcoming report.
Apple’s stock currently trades at $230.38, down 1% on Wednesday. The stock has exhibited a 52-week trading range of $164.08 to $237.49. Notably, Apple’s stock has gained 24% year-to-date in 2024.
With the release of its fourth-quarter financial results, Apple is poised to provide valuable insights into its performance and outlook. Investors will be closely watching the performance of the iPhone 16, the company’s AI initiatives, and its standing in the crucial Chinese market. These factors will likely shape the trajectory of Apple’s stock in the near future.
