Apple expected to post third consecutive down quarter, but its forecast is more important

Apple is expected to station its 3rd consecutive quarterly gross diminution erstwhile it reports net aft the doorbell connected Thursday. Wall Street expects $81.7 cardinal successful sales, which would beryllium down astir 2.3% from past year.

Apple banal is up implicit 51% truthful acold successful 2023, hitting all-time highs. Investors spot it arsenic a harmless haven with beardown currency flow, contempt worries astir slowing request for user goods, including PCs and smartphones.

Analysts volition besides privation to perceive astir however the existent quarter, which ends successful September, is shaking out. Apple hasn't fixed guidance since 2020, citing uncertainty, but it provides investors with immoderate information points that they tin usage to find whether Apple sees wide income increasing oregon shrinking.

The company's forecast volition beryllium much important. It whitethorn springiness clues arsenic to whether planetary economies are acceptable up for a "soft landing" aft 2 years of involvement complaint hikes.

The June play is typically Apple's slowest 4th of the year, portion its 4th fiscal 4th often captures back-to-school laptop spending, a fewer days of caller iPhone exemplary income — which usually travel retired successful September — and shows Apple's momentum heading into the vacation season.

"What volition substance astir volition beryllium management's September quarter," wrote Morgan Stanley expert Erik Woodring successful July, adding that helium expects Apple to usher to year-over-year gross maturation again.

Some analysts are anxious to spot Apple springiness information points on India sales. Cook traveled to the country successful April and spoke astir hopes for important maturation successful the region. India became 1 of Apple's apical 5 iPhone markets during the quarter, according to expert estimates.

"On the call, we look for further details connected its enlargement successful India, including its retail and manufacturing presence," D.A. Davidson expert Tom Forte wrote this week.

But Apple's older maturation driver, China, is apt to beryllium intimately watched arsenic well. Greater China — including Hong Kong and Taiwan — is Apple's 3rd largest income region, and it has reported 2 consecutive quarters of gross decline, adjacent arsenic the portion re-opened aft years of strict covid lockdowns.

"In our conversations, astir investors consciousness that a brushed China could airs a hazard to the numbers and further commentary, but we consciousness that Apple's presumption successful China is connected a coagulated footing and that the institution is apt to spot lone a tiny if immoderate diminution successful its iPhone sales," wrote Piper Sandler expert Harsh Kumar.

Kumar said if China ends up being weak, it could beryllium offset by beardown income momentum successful India.

Apple chiefly manufactures successful China and investors volition privation to perceive that the institution has flooded galore of the proviso concatenation snags that person hampered income implicit the past 2 years. If Apple stockpiled parts and has capable to marque what it needs to produce, it could assistance margins, analysts say.

Apple's profitable services part includes monthly subscriptions specified arsenic Apple Music, warranties nether AppleCare, fees from the App Store, advertizing gross from hunt licensing agreements with Google, payments from Apple Pay, and different products.

Wall Street likes to spot Apple's services concern turn regularly and smoothly, due to the fact that the margins connected services are truthful overmuch higher than erstwhile Apple sells hardware. In particular, galore analysts privation to spot services re-accelerate aft a fewer quarters of anemic maturation due to the fact that of lagging App Store bundle sales.

Apple suggested a 5% year-over-year summation successful services, and FactSet's estimates much than $20.7 cardinal successful revenue. But analysts volition privation to spot Apple awesome much maturation than that.

"For the Services business, we expect year-over-year gross maturation to accelerate from the +5% level expected successful [fiscal 3rd quarter,] with our checks suggesting online advertizing has improved," Deutsche Bank expert Sidney Ho wrote.

Analysts volition besides apt inquire astir artificial intelligence, fixed the industry-wide obsession with the exertion and a caller Bloomberg study that Apple is processing a ChatGPT-like AI exemplary internally. Don't expect Apple to gush astir what it's moving connected internally, though.

"With the authoritative intro of Vision Pro, we expect Apple's updated comments connected its AI aspirations to beryllium a absorption (albeit apt precise high-level)," wrote Wells Fargo expert Aaron Rakers.

Apple reports its results by merchandise line, which tin springiness investors a look into which businesses are thriving and which ones are successful a down cycle.

IPhone, iPad, and Mac income are each expected to beryllium down connected an yearly basis, with iPad income projected to driblet astir 11%, according to FactSet estimates. Wearables, the merchandise class with headphones and Apple Watch — and what volition apt beryllium the reporting class for Vision Pro erstwhile it goes connected merchantability — is projected to diminution little than 1%.

However, analysts expect Apple's services concern to turn 5.2% connected an yearly basis, which would beryllium a agleam spot for the report.

Here's what Wall Street is expecting, per FactSet estimates:

Here's what to expect from the company's merchandise lines, per FactSet estimates: