Apple is gearing up to release its fiscal fourth-quarter earnings after markets close on Monday. This marks new CEO John Ternus's first significant address to Wall Street in his new role. Analysts expect an 11% jump in revenue from last year, reaching approximately $113.8 billion. iPhone sales alone are projected to hit $56.59 billion.
This earnings report will cover eight days of sales from the newly launched iPhone 18 Pro. However, the iPhone Duo, Apple's latest flagship, wasn't available during this quarter. The lack of a new entry-level iPhone 18 and a $100 price hike on existing models could dampen demand, analysts warn.
Ternus, who succeeded Tim Cook on September 1, will likely face questions about Apple's approach in China, especially after its AI software received approval there. The company is also contending with global shortages of memory and flash storage, which are straining the wider consumer electronics industry.
Bank of America analyst Wamsi Mohan has taken a cautious stance on Apple's earnings. He points to concerns surrounding gross margins and price hikes. Apple's gross margin stood at 49.3% in the June quarter, but it's anticipated to dip to between 47.5% and 48% for September. Mohan notes that investors will likely focus on how component cost inflation, gross margin sustainability, and growth in services revenue play out.
The smartphone and PC markets are confronting severe challenges. Component prices, like those for memory and flash storage, are soaring. Market conditions have rarely been tougher. Intel saw its stock plummet 29% last Friday, its worst showing since the 1970s, due to a gloomy forecast tied to PC market struggles.
Apple has increased prices on nearly all its products, attributing this to what executives call a "thousand-year flood" in market conditions. The smartphone market is expected to shrink by close to 17% this year, while PC shipments might drop by 11%, according to IDC.
Despite these hurdles, Apple remains a darling among megacap tech stocks on Wall Street. Its shares have climbed 27% this year as of Friday's close, outperforming its peers and making Apple a standout in a sector under scrutiny for high expenses and shrinking cash flows.
Investors are keen to hear from Ternus, who's been active in his role, making public appearances and rolling out new products. His first major public appearance was at the Emmys, followed by a visit to an Apple store in New York.
Last week, Ternus continued a new style of product launches that began with the low-cost MacBook Neo in the spring. Monday's earnings call will be the first chance for investors to hear Ternus discuss Apple's future direction in detail.
As Apple readies to announce its results, it stands as the last among its megacap peers, except for Nvidia, which reports next month, to release quarterly earnings. The outcome of this earnings call could influence Apple's stock trajectory in the coming months.
