Buy, Sell or Hold Apple Stock? Key Tips Ahead of Q3 Earnings

Apple AAPL is set to report third-quarter fiscal 2025 results on July 31.Apple expects the June-end quarter’s (third-quarter fiscal 2025) revenues to grow in the low to mid-single digits on a year-over-year basis. The company expects the gross margin between 45.5% and 46.5%, including estimated tariff-impact worth $900 million.The Zacks Consensus Estimate for fiscal third-quarter revenues is pegged at $88.92 billion, indicating year-over-year growth of 3.67%. The consensus mark for earnings is pegged at $1.42 per share, up by a penny over the past 30 days. The estimate indicates a 1.43% increase from the year-ago quarter’s actual. Apple Inc. Price and EPS Surprise  Apple Inc. price-eps-surprise | Apple Inc. Quote AAPL’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the earnings surprise being 4.68%, on average.Let us see how things have shaped up prior to this announcement.Apple’s iPhone Sales Likely to Rise Y/Y in Q3Apple’s fortunes are heavily reliant on the iPhone, which is by far its biggest revenue contributor. The device accounted for 49.1% of net sales in the second quarter of fiscal 2025, wherein sales increased 1.9% year over year to $46.84 billion. The Zacks Consensus Estimate for fiscal third-quarter iPhone net sales is pegged at $40.61 billion, suggesting a 3.3% year-over-year growth.iPhone sales have been suffering from stiff competition in China from Chinese vendors, including Huawei and Xiaomi. However, Apple has recovered some ground, per Counterpoint’s latest data. Apple saw year-over-year growth of more than 8% for the period between April 1 and June 22, driven by the strong promotion of iPhone 16 Pro and iPhone 16 Pro Max, as well as iPhone prices in May. It is the first time Apple has recorded growth in China since the second quarter of 2023. Huawei continued to maintain its lead with year-over-year growth of more than 12%.China is an important market for Apple as the iPhone maker’s manufacturing is primarily concentrated in the country. U.S. President Donald Trump’s decision to levy tariffs on trade partners, including China, has negatively impacted Apple’s supply chain. Greater China sales decreased 2.3% year over year in the fiscal second quarter. The Zacks Consensus Estimate for fiscal third-quarter China sales is pegged at $15.27 billion, suggesting 3.7% growth from the figure reported in the year-ago quarter.AAPL’s Services to Grow in the Double Digits in Q3An 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 11.3% 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 second quarter of fiscal 2025. Per IDC, Apple had a market share of 9.1%, up 110 basis points (bps) on a year-over-year basis. Shipment grew 21.4% year over year to 6.2 million. Per Gartner, Apple had a market share of 9%, up 70 bps year over year.Apple’s estimated shipment growth rate is the largest in IDC’s vendor list, followed by ASUS and Lenovo’s LNVGY growth of 16.7% and 15.2%, respectively. Dell Technologies’ DELL shipment declined 3%, while HP HPQ saw shipment growth of 3.2%. According to Gartner’s list, Lenovo was placed at the #1 spot with shipment growth of 13.9%, trailed by Apple’s 13.4% and ASUS’s 8.7%. Dell Technologies’ shipment declined 3%, while HP saw growth of 3.2%.The consensus mark for Mac revenues is pegged at $7.16 billion, suggesting 2.2% growth on a year-over-year basis.AAPL Shares Underperform SectorApple shares have risen 14.5% year to date (YTD), underperforming the Zacks Computer & Technology sector’s return of 11%. While Apple shares have outperformed HP YTD, the shares have lagged Dell Technologies. HP shares dropped 21.3%, while Dell Technologies returned 13.9%.Apple Stock’s Performance Image Source: Zacks Investment Research The 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 28.23X, higher than the Zacks Computer & Technology sector’s 27.86X.Price/Earnings (F12M) Image Source: Zacks Investment Research AI Focus Aids AAPL’s ProspectsApple has been seeing better iPhone 16 sales in regions where Apple Intelligence is available. Apple expanded the availability of Apple Intelligence with iOS 18.4, iPadOS 18.4, and macOS Sequoia 15.4 updates in new languages, including French, German, Italian, Portuguese (Brazil), Spanish, Japanese, Korean and Chinese (simplified), as well as localized English for Singapore and India. At the end of 2025, Apple Intelligence will be available in eight more languages: Danish, Dutch, Norwegian, Portuguese, Swedish, Turkish, Chinese (traditional) and Vietnamese.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.Currently, APPL 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.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the favorite stock to gain +100% or more in the months ahead. They includeStock #1: A Disruptive Force with Notable Growth and ResilienceStock #2: Bullish Signs Signaling to Buy the DipStock #3: One of the Most Compelling Investments in the MarketStock #4: Leader In a Red-Hot Industry Poised for GrowthStock #5: Modern Omni-Channel Platform Coiled to SpringMost of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor. While not all picks can be winners, previous recommendations have soared +171%, +209% and +232%.Download Atomic Opportunity: Nuclear Energy's Comeback free today.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