Apple shares hovered around $338 before the company unveiled its fiscal third-quarter earnings, keeping investors on edge. The tech giant, valued at a staggering $5 trillion, has already climbed 25% this year, but expectations remain sky-high. Wall Street is poised for revenue to hit roughly $109 billion, up from $94 billion a year ago, with earnings per share forecasted at $1.89 compared to $1.57 previously.
Analysts are watching closely as Apple tries to continue its streak of beating forecasts, which has lasted eight quarters. The company’s shares now trade at about 40 times trailing earnings, well above its decade average near 25 times. That premium means even a slight miss could rattle the stock.
Services continue to be a key growth engine for Apple. Last quarter, services revenue reached nearly $31 billion, up 16%, and expectations for this quarter are for another 14-15% rise. This segment covers everything from the App Store and iCloud to Apple Music and AppleCare. Meanwhile, demand in Greater China has surged, with sales jumping 28% last quarter to $20.5 billion. Recent data points to strong iPhone sales in the region, though some customers may have rushed purchases before anticipated price hikes later this year. Apple also gained approval to launch Apple Intelligence in China with Alibaba's Qwen technology, which should fuel future growth but won't impact current earnings much.
On the cost side, rising memory prices are putting pressure on Apple’s margins. The company has already bumped up prices on certain Mac and iPad models to offset higher component costs. iPhone prices might also rise, a move that could protect profits but risk slowing down upgrades. Investors will be glued to Apple’s guidance for the upcoming quarters, especially its target gross margin range of 47.5% to 48.5%. A margin figure near the upper limit would help ease concerns over rising expenses.
This material is for informational purposes only and does not constitute financial advice.
