Apple earnings are coming out postmarket Thursday. Here’s what top analysts expect

Apple is set to release its fiscal third-quarter earnings, with analysts anticipating $1.33 EPS on $89.54 billion revenue, representing modest year-over-year growth. Despite a 17% year-to-date share decline significantly underperforming the S&P 500, most Wall Street analysts maintain a bullish outlook. Key investor focus areas include the trajectory of Services revenue growth, sales trends in Greater China, and Apple's perceived lag in artificial intelligence strategy compared to peers, alongside potential impacts from tariffs and demand pull-ins.

Analysis

Apple is approaching its fiscal third-quarter earnings report with consensus estimates projecting modest growth of 4.4% in revenue to $89.54 billion and 2.4% in earnings to $1.33 per share. This release follows a second quarter where the company beat headline estimates but revealed underlying weaknesses, including a deceleration in Services revenue growth to 11.7%, a 5% decline in the wearables division, and falling sales in Greater China. The stock's significant underperformance, down 17% year-to-date against an 8.7% rise in the S&P 500, amplifies the importance of this report. Despite this, a majority of analysts (32 of 49) maintain a buy or strong buy rating. Key areas of focus include a potential near-term beat for the June quarter, aided by favorable FX rates and a demand pull-in from tariff fears, as noted by UBS and Citigroup. However, the outlook for the September quarter and beyond is more cautious, with concerns centered on a potential reversal of this demand pull-in, the impact of tariffs on gross margins, and a perceived lag in Apple's artificial intelligence strategy, a point of concern for analysts at Barclays, Needham, and Morgan Stanley. The long-term investment thesis, articulated by firms like Goldman Sachs and JPMorgan, remains heavily dependent on sustained, robust growth from the high-margin Services business to drive future earnings expansion.

Key Decisions for Investors

• Investors should scrutinize the September quarter guidance for revenue and gross margins, as analysts from Evercore and KeyBanc suggest consensus expectations may be too high due to tariff impacts and the reversal of demand pull-ins from the June quarter.
• Monitor the Services revenue growth trajectory, as its ability to maintain mid-double-digit expansion is critical to the long-term bull case and justifying the stock's premium valuation.
• Evaluate management's commentary on its artificial intelligence roadmap, as a credible and detailed plan is needed to address widespread analyst concerns that Apple is 1-2 years behind its Big Tech peers.
• Closely watch for any signs of renewed weakness in Greater China and the impact of tariffs, as these remain significant risk factors that could undermine future performance.