Key Points:
- Apple faces Wall Street on Thursday for its first earnings report since announcing John Ternus will replace Tim Cook.
- Analysts expect the technology giant to report $109.7 billion in total revenue and massive growth in iPhone sales.
- The company recently launched a new $599 MacBook Neo laptop alongside the fresh iPhone 17e and iPad Air.
- Investors want to hear how the company handles rising memory chip costs and its quiet artificial intelligence strategy.
Apple releases its fiscal second-quarter earnings report on Thursday. This event creates a major moment for the massive technology company. For the first time, executives face Wall Street investors after making a massive leadership announcement last week. Current Chief Executive Officer Tim Cook told the world he will step down from his top role after spending 15 years on the job.
Financial analysts expect a very strong performance from the tech giant. Consensus estimates from LSEG show that Wall Street predicts Apple will report $109.7 billion in total revenue. This massive number represents a solid 15% increase over the $95.4 billion the company earned during the same period one year ago. Experts also predict earnings per share will hit $1.95 for the quarter.
The famous smartphone lineup remains the absolute biggest money maker for the business. Financial data firm StreetAccount shows that analysts expect iPhone revenue to reach an incredible $56.7 billion. This target requires a huge 20% jump in annual sales. Shoppers bought the new iPhone 17 in massive numbers after the device went on sale last year, driving most of this incredible financial growth.
Investors also want to see strong numbers from other important company divisions. Analysts expect Mac computers to generate $8.16 billion in sales and iPad tablets to generate $6.71 billion in sales. The wearables, home, and accessories category should add another $7.8 billion to the total pile. Meanwhile, the highly profitable services division will likely report massive revenue of $30.4 billion. Overall, experts predict the company will maintain a healthy gross margin of 48.4%.
Back in March, Apple completely surprised the technology world by releasing several brand new products. The company launched the new iPhone 17e and updated the iPad Air tablet line with powerful M4 chips in both 11-inch and 13-inch sizes. However, the biggest shock came when executives revealed the MacBook Neo. They priced this brand new laptop at just $599 to attract young students and budget-conscious shoppers.
While selling millions of devices pays the bills, Wall Street cares deeply about the upcoming leadership changes. Investors desperately want to hear what incoming CEO John Ternus plans to do with the massive company. Last week, Apple announced that Ternus will officially succeed Cook on September 1. Cook will then transition into a new role as the executive chairman. Ternus brings deep experience to the top job after running the hardware division for many years.
When Ternus takes the big office, he must immediately figure out a clear path forward for artificial intelligence. Earlier in the quarter, Apple told the public it would partner directly with Google. The technology giant plans to use Google’s powerful Gemini artificial intelligence model to power its popular Siri voice assistant. Investors want to know whether this partnership will hold in the long term or if Apple will eventually build its own massive systems.
Right now, Apple spends significantly less money on artificial intelligence technology than its main rivals. Competitors like Meta, Amazon, Alphabet, and Microsoft currently pour massive amounts of cash into new data centers. Together, these rival companies plan to spend well over half a trillion dollars this year on artificial intelligence infrastructure alone. Apple takes a much cheaper and quieter approach to this booming tech trend.
A global memory shortage will also dominate the upcoming earnings call. Every single device Apple makes uses a massive amount of internal storage and memory chips. Right now, heavy demand from artificial intelligence developers drives memory prices through the roof. Just on Wednesday, both Meta and Microsoft told investors that rising memory costs forced them to raise their full-year spending forecasts.
Despite these industry-wide supply problems, Apple easily avoided passing on any significant price hikes to its loyal customers. The company continues to sell its flagship phones and computers at normal retail prices. Analysts at Evercore ISI wrote a detailed note to their clients this week regarding the problem. They believe Apple fully controls its current memory costs, citing the successful pricing of recent product launches as evidence that executives planned.
