What Wall Street is saying about Apple ahead of earnings

Apple (AAPL) is scheduled to report results of the third fiscal quarter of FY24 after the market close on Thursday, August 1, with a conference call scheduled for 5:00 pm ET. What to watch for:

LAST QUARTER: Last quarter, Apple beat consensus sales and earnings expectations, reporting EPS of $1.53 on Q2 revenue of $90.8B, which compared to consensus forecasts of $1.50 and $90.01B, respectively.

At that time, Apple CEO Tim Cook said: “Today Apple is reporting revenue of $90.8 billion for the March quarter, including an all-time revenue record in Services. During the quarter, we were thrilled to launch Apple Vision Pro and to show the world the potential that spatial computing unlocks. We’re also looking forward to an exciting product announcement next week and an incredible Worldwide Developers Conference next month. As always, we are focused on providing the very best products and services for our customers, and doing so while living up to the core values that drive us.”

Apple also raised its dividend 4% and authorized an additional program to repurchase up to $110B of the company’s common stock.

Current consensus EPS and revenue forecasts for Apple’s June-end quarter stand at $1.35 and $84.53B, respectively, according to data from LSEG Data and Analytics.

Consensus EPS and revenue forecasts for Apple’s September-end quarter stand at $1.56 and $93.39B, respectively, according to LSEG Data.

Among analysts tracked by Bloomberg that have updated their views on Apple within the last twelve months, 40 have Buy or equivalent ratings, 16 have Hold or equivalent ratings and three have Sell or equivalent ratings. The average twelve month price target of 43 of those analysts is $228.41.

NEW IPADS: In May, Apple hosted its “Let Loose” product launch event and unveiled a new iPad Pro series powered by a brand new M4 chip, upgraded iPad Air with M2 chips and a new 13-inch size, upgraded Apple Pencil Pro with more interactions and showed off a Magic Keyboard.

Afterward, Wedbush analyst Daniel Ives noted that the highlight of the virtual event was the new iPad Pro, which now includes the new M4 chip that’s focused on improving performance for AI-related tasks in iPadOS. Overall, Apple unveiled multiple new products in another “flex the muscles moment” heading into a robust product cycle in the next 6-9 months led by the iPhone 16 launch this Fall into its golden installed base, said Wedbush, which called the iPad launch just the start of “a massive Cupertino product cycle ahead.” Wedbush has an Outperform rating on Apple shares.

STREET BULLISH ON AI-CHARGED IPHONE CYCLE: During the WWDC developer conference in early June, Apple introduced “Apple Intelligence,” which it calls “the personal intelligence system for iPhone, iPad, and Mac that combines the power of generative models with personal context to deliver intelligence that’s incredibly useful and relevant.” Apple said: “Apple Intelligence is deeply integrated into iOS 18, iPadOS 18, and macOS Sequoia. It harnesses the power of Apple silicon to understand and create language and images, take action across apps, and draw from personal context to simplify and accelerate everyday tasks. With Private Cloud Compute, Apple sets a new standard for privacy in AI, with the ability to flex and scale computational capacity between on-device processing and larger, server-based models that run on dedicated Apple silicon servers.”

Apple’s CEO Tim Cook added: “We’re thrilled to introduce a new chapter in Apple innovation. Apple Intelligence will transform what users can do with our products – and what our products can do for our users. Our unique approach combines generative AI with a user’s personal context to deliver truly helpful intelligence. And it can access that information in a completely private and secure way to help users do the things that matter most to them. This is AI as only Apple can deliver it, and we can’t wait for users to experience what it can do.”

The day after the WWDC kickoff, DA Davidson upgraded Apple to Buy from Neutral with a price target of $230, up from $200. The analyst believes the artificial intelligence capabilities Apple unveiled at the Worldwide Developers Conference will lead to an iPhone upgrade cycle. The integration of summarization, enhanced search, multi-modality, text generation, and enhanced photo editing into the exiting ecosystem “will drive much broader adoption of AI than we have seen to date,” the analyst tells investors in a research note. Apple is also the first to introduce a meaningful agent capability that will allow Siri to execute tasks on behalf of the user, the firm points out. Davidson says Apple is “uniquely positioned to offer these capabilities, and may be the only one capable of doing so any time soon.”

On June 14, Erste Group analyst Hans Engel upgraded Apple to Buy from Hold, saying the company benefits from a very high level of customer loyalty. Ongoing innovations in Mac products and high-end iPhones will lead to a continuation of Apple’s long-term growth trend, the analyst tells investors in a research note. The firm also believes artificial intelligence integration with Open AI will lead to rising software and hardware sales.

On June 26, Rosenblatt upgraded Apple to Buy from Neutral with a price target of $260, up from $196. Based on the firm’s recent U.S. survey, Rosenblatt says strong privacy is “by far the top feature consumers want in AI,” so it contends that the unique privacy focus of Apple Intelligence “could resonate” and argues for market share lift potential for Apple in AI. Apple’s approach also appears to “immunize it from cost pressures at hyperscalers,” while enabling the iPhone maker to benefit from their investments, the analyst tells investors.

On July 15, Loop Capital analyst Ananda Baruah upgraded Apple to Buy from Hold with a price target of $300, up from $170. Loop’s supply chain work suggests that Apple has an opportunity the next few years to solidify itself as consumer’s generative artificial intelligence “base camp” of choice, just as it did for social media 15 years ago with the iPhone and digital content consumption 20 years ago with the iPod, the analyst tells investors in a research note. Each of those trends were material stock catalysts and the basic math suggests that generative AI “has the opportunity to be the same,” contends the firm. Loop says Apple is looking to “3-peat as the platform of choice.”

The same day, Morgan Stanley raised the firm’s price target on Apple to $273 from $216 and kept an Overweight rating on the shares. The analyst also replaced Dell Technologies (DELL) with Apple as the firm’s top pick in enterprise hardware. Apple Intelligence is a “clear catalyst” to boost iPhone and iPad shipments, the analyst tells investors in a research note. The firm says its analysis into the iPhone installed base, upgrade rates, and mix shift “now points a record cycle ahead,” driving its fiscal 2026 earnings per share estimate to $8.70, 7% above the consensus. Morgan Stanley thinks Apple Intelligence is a “clear catalyst for a multi-year product upgrade cycle.”

OTHER HEADLINES: During the quarter, other reporting on Apple’s products and AI plans have included:

• Apple to delay release of new AI features in Europe due to DMA, FT reports
• EU accepts commitments by Apple opening access to ‘tap and go’ tech on iPhones
• Apple working on foldable iPhone for release as soon as 2026, The Information says
• White House says Apple signed onto voluntary commitments on AI
• Apple’s AI features to arrive later than anticipated, Bloomberg reports
• Apple’s AI models were trained on Google’s custom chips, CNBC reports

SENTIMENT: Check out recent Media Buzz Sentiment on Apple as measured by TipRanks.