Apple’s Q3 Earnings Report Outlook

According to Investing.com, Apple’s upcoming Q3 earnings report is anticipated to meet or slightly exceed forecasts. However, analysts from Barclays and Citi caution about future guidance, particularly for the December quarter.

Key Points

• Q3 Strength: Barclays suggests that Apple's Q3 results will likely benefit from "late cycle iPhone 15 strength and better Services growth". They predict iPhone shipments might exceed the consensus estimate of 51 million units.
• Services Revenue: Growth in Services revenue is expected to be around 13-14% year-over-year, slightly above consensus.
• Future Risks: The firm warns that the outlook for the December quarter could be at risk due to "mixed iPhone 16 data points and increased newsflow on build revisions". They point out that sell-through remains flat or down compared to last year and foresee potential production cuts affecting shipments into early 2025.

Citi’s Perspective

Citi anticipates challenges ahead due to delays in Apple’s new software features. They project total/iPhone sales for the September and December quarters to be 2%/3% below market expectations due to this delay.

Despite the short-term concerns, Citi holds an optimistic view for 2025, predicting a robust upgrade cycle driven by the iPhone 17, forecasting a 9% year-over-year unit-driven upgrade cycle next year.

Conclusion

Both Barclays and Citi view Apple’s Services growth as a significant driver for the company. Citi noted a 13% increase in App Store revenue in the September quarter, aligning with Apple’s expectation for consistent double-digit growth.

While regulatory risks, delayed software features, and production challenges loom, both firms remain attentive to the market dynamics surrounding Apple's product performance.