Investors closely watch iPhone demand and the impact of Apple Intelligence on sales.
Ambitious forecasts could sidestep any earnings disappointment, but the stock looks overvalued.
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Apple (NASDAQ:) is set to release its this evening after the market closes, marking a key event in an especially busy earnings week. The early reports this week have been a mixed bag, with some companies falling short in both results and forecasts.
This situation was particularly evident with (NASDAQ:) and (NASDAQ:). After posting their results, both saw shares take a nosedive during Wednesday’s after-hours trading.
In this context, Apple’s results are eagerly awaited. The behemoth company is currently vying with Nvidia (NASDAQ:) for the title of the world’s largest company. Following the recent launch of the iPhone 16, Apple has a lot riding on this earnings report.
All eyes are on the demand for Apple’s latest smartphone model. However, the older iPhone 15 models are still expected to generate the majority of revenue. Investors are curious to see if Apple’s push into AI will translate into higher sales.
This week, Apple introduced its first set of “Apple Intelligence” features, about six weeks after the iPhone 16 launch. However, we will not see Apple’s major AI features until early next year. This means AI’s impact on this quarter’s sales may be limited.
Apple will also update its forecasts, especially as we approach the crucial holiday season.
These forecasts will offer insights into how Apple views AI’s potential impact on sales. Like other tech giants releasing earnings this week, Apple’s forecasts for upcoming quarters could influence the stock trend more than the results of the past quarter.
To set the stage for Apple’s quarterly results, we’ll dive into the current stock price trends, consensus forecasts for today’s figures, and analysts’ and valuation models’ perspectives on future share prices.
Apple Shares Hover Near Record Highs
From a graphical point of view, Apple shares hit an all-time intraday high of $237.49 on October 15 and closed at a record $236.48 on October 23.
Source: InvestingPro
The overall trend has been positive since the low on August 5, but the aforementioned records, along with the July 15 peak at $237.23, form a significant resistance zone.
Consensus Forecasts for Apple’s Financial Results This Thursday
According to InvestingPro, analysts expect Apple’s Q3 results to show an average EPS of $1.6, a 9.58% increase year-over-year, on $94.416 billion in sales—up 5.5% from the same quarter last year.
Source: InvestingPro
Apple has narrowly beaten analysts’ EPS expectations for six consecutive quarters and exceeded revenue forecasts in five of the last seven quarters.
Source: InvestingPro
Apple’s Q3 results today could once again exceed consensus forecasts.
Apple’s Share Price Potential According to Analysts and Valuation Models
Analysts generally view Apple’s stock as fairly valued at the moment. The average target among 42 analysts tracking the stock is $240.77, about 4.6% above Wednesday’s closing price.
Source: InvestingPro
Moreover, InvestingPro’s Fair Value, which combines 14 financial models, pegs AAPL at $184.85, nearly 20% below its current price.
Conclusion
With limited upside potential according to analysts and suggestions of overvaluation by valuation models, Apple may need a big surprise in its results to see significant stock gains. Yet, the giant might offset any lackluster earnings with optimistic forecasts, especially as it plans to deepen AI integration into its products next quarter.
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Disclaimer: This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, counsel or recommendation to invest as such it is not intended to incentivize the purchase of assets in any way. I would like to remind you that any type of asset, is evaluated from multiple perspectives and is highly risky and therefore, any investment decision and the associated risk remains with the investor.
