What to Expect With Apple Earnings on Deck (NASDAQ: AAPL)

Apple Inc. (NASDAQ: AAPL) is set to announce earnings after the bell, against the backdrop of negative analyst sentiment over the past few months. This earnings announcement comes also comes at a busy period for tech, as Tesla (NASDAQ: TSLA), Meta Platforms (NASDAQ: META), and Microsoft (NASDAQ: MSFT) all released earnings yesterday evening.

Apple's stock has been navigating through a correction zone, remaining 8% down since markets reopened on Boxing Day but has recently flipped into favour against other tech names. Since Monday, when the remainder of big tech was in the midst of a sell-off, Apple has quietly gained 7.26%. With Nvidia down more than 15% since the start of the week, AAPL is now firmly the number one stock by market cap.

This sets the stage for the upcoming earnings, with analysts expecting $2.35 against revenue of $124.03 billion, reflecting a 3.7% year-over-year revenue growth. Apple has consistently beat expectations, with the last four quarters all seeing mild beats on both top and bottom lines.

Despite these growth expectations, Apple's revenue estimates are at the lower end of the company's forecast for sales to rise in “low to mid-single digits.” This has been influenced by a softer demand for iPhones, particularly in China, as reported by some analysts. The iPhone segment remains a crucial factor for Apple, contributing to over half of its revenue and significantly impacting the company's top line.

Furthermore, consensus estimates indicate an 8.3% increase in Apple's earnings per share (EPS). Apple has also forecasted gross margins between 46% and 47% for the quarter, highlighting their efficiency and pricing strategy. However, the outlook among analysts is mixed; while some banks anticipate a decent report due to lowered expectations, others have downgraded their forecasts. MoffettNathanson, Loop Capital, Jefferies, and UBS have all revised their outlooks for Apple, with UBS lowering iPhone sales estimates specifically.

While Apple's earnings report is poised amid mixed expectations, the combination of recovering stock prices, revenue forecasts, and analyst ratings will be crucial in determining whether Apple continues to be a viable investment option. Investors will be paying close attention to iPhone sales and gross margin performance when assessing Apple's long-term growth prospects and stock valuation.