Can Apple's Slim iPhone And Cheaper Macs Reverse The 2025 Stock Slump?

Bank of America analyst Wamsi Mohan projects Apple (AAPL) will experience a significant rebound in the second half of fiscal 2025, driven by new high-average selling price (ASP) product cycles, including an anticipated 'slim' iPhone, and sustained growth in its Services division. Mohan maintained a Buy rating and a $235 price target, forecasting Q3 revenue of $90.2 billion and EPS of $1.45, slightly above consensus, despite near-term pressures from tariff costs and regulatory scrutiny. The analyst anticipates gross margin expansion and improved replacement rates from new product launches, positioning the stock for renewed strength despite current headwinds.

Analysis

Bank of America analyst Wamsi Mohan presents a bullish case for Apple (AAPL), forecasting a significant rebound in the second half of fiscal 2025, supported by a Buy rating and a $235 price target. The core driver of this outlook is a new product cycle, headlined by a high-ASP 'slim' iPhone expected in fall 2025, which is projected to enhance gross margins and accelerate replacement rates. For the immediate fiscal third quarter, the analyst's estimates of $90.2 billion in revenue and $1.45 EPS are slightly above consensus, despite forecasting a $900 million impact from tariffs. While near-term gross margin is expected to dip to a trough of 45% in Q4 due to an additional $1 billion in tariff costs, a recovery is anticipated into fiscal 2026. This product-driven optimism is buttressed by the continued strength of the Services division, which is forecast to grow 12% year-over-year in both Q3 and Q4, reaching $27.1 billion and $28 billion respectively. The analysis acknowledges key investor concerns, including regulatory scrutiny from the DOJ and App Store headwinds, but posits that the focus will shift to the company's margin recovery and growth trajectory fueled by these upcoming launches.

Key Decisions for Investors

• Investors could view the current subdued sentiment as an opportunity, as the stock's performance is expected to be back-half weighted towards H2 2025, driven by new product catalysts and margin expansion.
• Monitor Apple's upcoming earnings call on July 31 for management's guidance on gross margins, specifically how the company plans to absorb significant tariff costs before the new high-ASP products are launched.
• While the product pipeline is a primary catalyst, it is prudent to track regulatory risks related to the DOJ's scrutiny of TAC payments and App Store policies, as adverse outcomes could impact the high-growth Services segment.
• The performance of the 'slim' iPhone, anticipated in fall 2025, should be considered a key long-term catalyst, and any channel checks or reports on its pricing and consumer adoption will be critical to validating the margin expansion thesis.