Key facts
- Apple's stock is up 26% year-to-date, leading the Magnificent Seven.
- Investors are focused on Apple's AI strategy, iPhone 18 pricing, and memory costs.
- Bank of America has a 'Buy' rating with a $380 price target.
- Goldman Sachs expects Apple to beat revenue and earnings estimates, with a $370 price target.
- Morningstar views Apple as 'least interesting' this earnings season due to its AI strategy.
- Jefferies has a price target of $308.92, implying potential downside.
Tim Cook will lead his final earnings call as Apple CEO on Thursday, with the company's stock performance and future strategy under intense investor scrutiny. Apple has seen significant gains this year, with its stock up 26% year-to-date, making it the top performer among the Magnificent Seven. Key discussion points for investors include the pricing of the upcoming iPhone 18, the impact of rising memory costs on margins, the details of the new Apple Upgrade program, and the company's approach to artificial intelligence.
Bank of America views the new Apple Upgrade program, which allows customers to lease products like iPhones and iPads, as a positive development that could reduce affordability friction, increase premium product mix, and accelerate replacement cycles. Analyst Wamsi Mohan noted potential upside from residual-value monetization. The firm maintains a 'Buy' rating on Apple with a price objective of $380 per share.
Goldman Sachs anticipates Apple will report 18% year-over-year revenue growth, surpassing the Wall Street consensus of 15%, driven by strong iPhone and Mac sales. The bank also expects an earnings per share of $1.93, exceeding the consensus estimate of $1.89. Analyst Michael Ng highlighted Apple's services, such as iCloud+ and AppleCare+, as a key growth driver for the next five years, supporting the company's premium valuation. Goldman Sachs has set a price target of $370 per share.
Morningstar's chief US market strategist, Dave Sekera, described Apple as the 'least interesting' mega-cap company this earnings season, primarily due to its perceived lack of engagement in the AI conversation. Sekera pointed to the need for Apple to address rising memory costs and whether higher iPhone 18 prices might spur demand for the iPhone 17. He expressed a desire for more clarity on Apple's AI use cases and its strategy for driving economic value for users, noting the company's avoidance of significant capital expenditure in the AI buildout boom.
Jefferies, however, forecasts potential downside for Apple's stock over the next 12 months, with a base-case price target of $308.92. Analyst Edison Lee expressed concerns that Apple may have missed on gross margins in the previous quarter and anticipates that rising memory costs will continue to pressure margins. While acknowledging Apple's ability to offset some of these costs through its premium iPhone roadmap and price increases, Jefferies maintains a cautious outlook.