Apple reports results after the bell. Here’s what Wall Street is watching

Apple’s fiscal third-quarter earnings after the bell Thursday mark the next big test for a market struggling to recover from a recent tech wreck. Analysts forecast earnings to come in at $1.35 per share, and revenues to hit $84.53 billion for the period, per LSEG. iPhone sales are expected to reach $38.64 billion and decline more than 2% year over year as the company grapples with a stretch of stagnant growth. AAPL YTD mountain Shares performance this year That makes guidance the most critical component of Apple’s print, especially as it readies for what some analysts are calling the most significant upgrade cycles in years this September, driven by new AI features dubbed Apple Intelligence. “We expect iPhone commentary to be the key catalyst this quarter with bullish statements about iPhone 16 expectations and continued stability in China likely to drive shares higher,” said Evercore ISI’s Amit Daryanani, who has an outperform rating. “We think the AI features coupled with a sizable portion of the base up for refresh should drive an iPhone Super Cycle in the Dec-qtr and through FY25.” Barclays analyst Tim Long, who has a neutral rating on Apple, referred to the September guide as the “main event” that should determine share performance. He lifted his estimates for the September quarter but retained a neutral rating on shares given the stock’s recent run. Long also echoed concerns the new iPhone won’t be enough to fuel a “meaningful” upgrade cycle to support the premium. “We believe the stock has already run in anticipation of iPhones bottoming and the upcoming ramp of AI features,” he wrote. AI-fueled upgrade cycle Apple’s September quarter is expected to include about a week of new iPhone sales. This should enable iPhone revenues to return to growth, said Evercore ISI’s Daryanani. The delayed launch of the new AI features should also extend in this cycle, some analysts say. That push-out could bode well for the stock and create a period of “sustained growth” versus a strong cycle and “digestion” period, said Bernstein’s Toni Sacconaghi. To be sure, several Wall Street analysts have boosted their price targets in recent weeks, citing AI tailwinds. JPMorgan’s Samik Chatterjee upped his target to $265 from $245 and placed a positive catalyst watch on shares. The revision reflect roughly 19% upside from Wednesday’s close. Revenue upside from this opportunity should fuel revisions to full-year earnings and “ease investor concerns around a premium valuation multiple,” he added. Baird’s William Power upped his target to $240 from $200 a share, reflecting 8% upside from Wednesday’s close. He estimates that every addition 10 million iPhone units could contribute $9 billion in revenue, or 12 cents to 2025 EPS estimates. “Following years of slowing upgrade rates, including new lows for AT & T and Verizon this week, we believe Apple Intelligence could provide a much-needed upgrade catalyst, boosting revenue and EPS growth meaningfully,” he wrote in a recent note to clients. Wall Street will also keep a close watch on China sales following an 8% decline during the second quarter. Analysts warn that ongoing share losses in China to Huawei could hurt iPhone revenues. “While Greater China sales remain sluggish, mainland China iPhone sales have been stronger than expected and we are encouraged by iPhone demand picking up in emerging markets,” said Raymond James analyst Srini Pajjuri.