Apple Set to Report Q4 Earnings: Buy, Sell or Hold the AAPL Stock?

Apple AAPL is set to report fourth-quarter fiscal 2025 results on Oct. 30.Apple expects fourth-quarter fiscal 2025 net sales to grow in the mid to high single digits on a year-over-year basis. The company expects the Services year-over-year growth rate to be similar to that of the June quarter (13.3%). Gross margin is expected to be 46-47% in the fourth quarter of fiscal 2025, including a tariff impact of $$1.1 billion. Operating expenses are expected to be between $15.6 billion and $15.8 billion.The Zacks Consensus Estimate for fiscal fourth-quarter net sales is pegged at $101.19 billion, indicating year-over-year growth of 6.6%. The consensus mark for earnings is pegged at $1.73 per share, down by a penny over the past 30 days. The estimate indicates a 5.5% increase from the year-ago quarter’s reported figure.Consensus Estimate Trend Image Source: Zacks Investment Research AAPL’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the earnings surprise being 6.2%, on average.   Apple Inc. Price and EPS Surprise Apple Inc. price-eps-surprise | Apple Inc. Quote Let us see how things have shaped up prior to this announcement.Apple’s iPhone Sales Likely to Rise Y/Y in Q4Apple’s fortunes are heavily reliant on the iPhone, which is by far its biggest revenue contributor. The device accounted for 47.4% of net sales in the third quarter of fiscal 2025, wherein sales increased 13.5% year over year to $44.58 billion. The Zacks Consensus Estimate for fiscal fourth-quarter iPhone net sales is pegged at $49.75 billion, suggesting a 7.6% year-over-year growth.iPhone sales have been suffering from stiff competition in China from Chinese vendors, including Huawei and Xiaomi. China is an important market for Apple as the iPhone maker’s manufacturing is primarily concentrated in the country. Per Counterpoint data, Apple shipments increased 1% year over year, driven by price discounts for the iPhone 16. However, Apple, with 15% market share, trailed Huawei, Vivo, OPPO and Xiaomi.The Zacks Consensus Estimate for fiscal fourth-quarter China sales is pegged at $16.23 billion, suggesting 8% growth from the figure reported in the year-ago quarter.AAPL’s Services to Grow in the Double Digits in Q4An expanding paid subscriber base has been a key catalyst for the Services business, which has been riding on the increasing popularity of the App Store and an expanding installed base of devices. Apple has more than 1 billion paid subscribers across its Services portfolio, offering Apple TV+, Apple Arcade, Apple News+, Apple Card, Apple Fitness+ and Apple One bundle. The consensus mark for Services is pegged at $26.96 billion, suggesting 12.3% growth on a year-over-year basis.Apple’s Mac Sales to Rise Y/YAAPL has been gaining share in the PC market, thanks to strong demand for the latest Mac devices powered by the M4 family of chips — M4, M4 Pro and M4 Max. Apple’s strong Mac portfolio helped it gain market share in the third quarter of fiscal 2025. Per IDC, Apple had a market share of 9%, up 30 basis points (bps) on a year-over-year basis. Shipment grew 13.7% year over year to 6.8 million. Per Gartner, Apple had a market share of 8.9%, up 20 bps year over year.In terms of shipments, Apple trails Lenovo’s LNVGY growth of 17.3%, per IDC data. Dell Technologies’ DELL shipment increased 2.6%, while HP HPQ saw shipment growth of 10.7%. According to Gartner’s list, Lenovo was placed at the #1 spot with shipment growth of 16.6%, trailed by Apple’s 10.7%, HP’s 10.6% and Dell Technologies’ 2.5% growth.The consensus mark for Mac revenues is pegged at $8.44 billion, suggesting 9% growth on a year-over-year basis.AAPL Shares Underperform Sector Image Source: Zacks Investment Research Apple shares have risen 5% year to date (YTD), underperforming the Zacks Computer & Technology sector’s return of 26%. While Apple shares have outperformed HP YTD, the shares have lagged Dell Technologies. HP shares dropped 15.2%, while Dell Technologies returned 37.7%.Apple Stock’s PerformanceThe AAPL stock is not so cheap, as the Value Score of D suggests a stretched valuation at this moment.In terms of the forward 12-month price/earnings, AAPL is trading at 33.22X, higher than the Zacks Computer & Technology sector’s 29.64X.AAPL Stock is Overvalued Image Source: Zacks Investment Research AI Focus to Aid AAPL’s ProspectsApple has been seeing better iPhone sales in regions where Apple Intelligence is available. iPhone 17 sales are off to a strong start as compared with iPhone 16, driven by a better chip (A19), improved display (6.3-inch Super Retina XDR display with ProMotion), and an upgraded selfie camera. The launch of the new 11-inch and 13-inch iPad Pro, 14-inch MacBook Pro, and Apple Vision Pro, all powered by the new M5 chip, bodes well for Apple’s prospects. Apple’s AI push is expected to bring consumer-focused AI-enabled PCs into the market, thereby aiding its Mac shipments in the long run.However, stiff competition in the smartphone and PC market, along with regulatory headwinds, is a concern. A stretched valuation makes the stock risky for investors.Currently, AAPL carries a Zacks Rank #3 (Hold), which implies that investors should wait for a favorable point to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Beyond Nvidia: AI's Second Wave Is HereThe AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. Little-known AI firms tackling the world's biggest problems may be more lucrative in the coming months and years.See "2nd Wave" AI stocks now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Apple Inc. (AAPL): Free Stock Analysis Report HP Inc. (HPQ): Free Stock Analysis Report Dell Technologies Inc. (DELL): Free Stock Analysis Report Lenovo Group Ltd. (LNVGY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks