Apple set to top Q3 earnings forecasts on resilient Services, strong margins

Goldman Sachs anticipates Apple Inc. will surpass its fiscal Q3 2025 revenue and EPS forecasts, projecting $89.5 billion in revenue and $1.45 EPS, driven primarily by resilient double-digit Services growth and stronger-than-expected gross margins of 46.5%. The analysts maintain a 'Buy' rating, citing strength across product segments and future demand catalysts like the iPhone 17, while also expecting a strong start to fiscal Q4.

Analysis

Goldman Sachs anticipates Apple will exceed consensus estimates for its fiscal third quarter, forecasting revenue of $89.5 billion and EPS of $1.45, compared to the consensus of $89.1 billion and $1.42, respectively. The expected outperformance is primarily attributed to robust gross margins, projected at 46.5% versus the 45.9% consensus, and resilient double-digit growth in the Services segment. Services revenue is forecast to grow 11% year-over-year to $26.9 billion, underpinned by a 12% increase in App Store billings, demonstrating resilience despite regulatory uncertainties surrounding off-platform payments. While iPhone revenue is expected to be largely in line with consensus at $39.8 billion, the broader product portfolio shows mixed dynamics, with Mac revenue projected to rise 5% on strong unit growth and iPad revenue up 3% due to higher average selling prices. Looking forward, Goldman Sachs sees catalysts for sustained growth, including heightened wireless carrier promotions and an anticipated upgrade cycle driven by the iPhone 17's new form factor and the introduction of Apple Intelligence. This optimism extends to the Q4 outlook, for which they project revenue of $99.5 billion, ahead of current market expectations.

Key Decisions for Investors

• Given the stock's 14% year-to-date decline, investors may consider the current valuation an opportunity ahead of a potential earnings beat, aligning with Goldman Sachs' 'Buy' rating.
• Investors should scrutinize the reported gross margin figure and the Services revenue growth rate to validate the core thesis of operational strength and resilience against regulatory pressures.
• Pay close attention to management's guidance and commentary on the upcoming product cycle, particularly the iPhone 17 and Apple Intelligence, as these are positioned as key drivers for future upgrade demand and revenue acceleration.