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- Apple is scheduled to report its fiscal fourth-quarter earnings on Thursday after the market close.
- Investors are focused on Apple's iPhone sales in China and the company's outlook for the holiday quarter.
- Here's what Wall Street expects from Apple's upcoming earnings report.
All eyes are on Apple as it is scheduled to report its fiscal fourth-quarter earnings on Thursday after the market close.
Analysts are focused on the state of the iPhone maker's China business, the company's outlook for the holiday quarter, and any commentary related to the revenue it receives from Google for its default search engine deal, which is at the center of the Justice Department's anti-trust case against Alphabet.
Here are the quarterly figures Wall Street expects, according to data from Bloomberg:
- Revenue: $89.34 billion
- Earnings per share: $1.39
- Gross margin: 44.5%
Apple has been selling its new iPhone 15s for just over a month, and estimated delivery times have been steadily shrinking, according to JPMorgan. That suggests demand is weaker than prior iPhone launches, supply has caught up, or a mix of both.
On Monday, Apple announced a refreshed lineup of MacBook Pro and Mac computers as well as its new family of M3 chips, looking to jump start sales at its computer division.
Here's what Wall Street analysts are saying about Apple's upcoming earnings report.
1. Goldman Sachs: double-digit revenue declines in Mac and iPad
Goldman sees Apple reporting $1.39 in EPS and revenue of $88.9 billion, about in-line with estimates.
The bank said Apple can't rely on its Mac and iPad division for earnings strength in the quarter, leaving the iPhone and Services businesses doing much of the heavy lifting.
"We expect double-digit revenue declines in Mac (-24% year-over-year) and iPad (-12% year-over-year) reflecting difficult year-ago comps that benefited from backlog fulfillment, particularly in Mac," Goldman Sachs said in a recent note.
Other topics investors will be focused on, according to Goldman Sachs, include the potential impact of increased smartphone competition in China, the future of Apple's default search engine deal with Google, and details on artificial intelligence.
Goldman Sachs rates Apple at a "Buy" with a $213 price target, representing potential upside of 25%.
JPMorgan: 'Higher competitive pressures in China'
Analysts expect Apple's earnings to be "better than feared," but highlighted increasing risks related to China.
"We see challenges for Apple stemming from higher competitive pressures in China, as well as the macro backdrop remaining challenging globally," JPMorgan said in a recent note, adding that it expects underwhelming first-quarter guidance.
But Apple should still command a premium valuation as investors "continue to perceive the company to be more resilient to the macro despite considerable exposure to consumer spending," it added.
Meanwhile, Apple's Services business is the "underappreciated driver of the financials," with double-digit revenue growth and a higher revenue mix that boosts margins, the note said.
JPMorgan rates Apple at "Overweight" with a $230 price target, representing potential upside of 35%.
Bloomberg Intelligence: China likely 'most important metric'
Investors will be focused on Apple's commentary during the earnings call, and Bloomberg Intelligence expects concerns to surround the company's China business.
"Apple's commentary about iPhone demand and the competitive climate in China will likely be the most important metric to focus on," Bloomberg Intelligence analyst Lucas Ramadan said in a recent note.
Ramadan highlighted recent reports that suggest sales of the iPhone 15 in China have been weak, but the big question is what's driving that weakness.
Is it due to a sluggish Chinese economy, increased competition from Huawei, and/or rising nationalism?
"Apple's commentary on which of the above-mentioned factors are affecting sales would be critical, as the latter two are bigger issues, compared to lower sales due to short-term spending issues," Ramadan said.