Hopes for iPhone 17 and worries over AI: analysts divided ahead of Apple report

Investors are cautiously awaiting Apple's quarterly results, which will be released on July 31 after the close of the main trading session. Market participants' attention is focused on the prospects of iPhone 17, the development of AI products, sales in China and risks associated with U.S. duties.

The Consensus Forecast compiled by Bloomberg Intelligence, suggests that Apple will report third-quarter earnings growth of 2.4% and revenue growth of 4.1% - a pace that falls well short of Wall Street's expectations for the entire tech sector (+16.8% on average for earnings and +13% for revenue). If the company does not beat them, its results will contrast with the successful quarters of the "Magnificent Seven" - Meta, Microsoft and Alphabet.

- Goldman Sachs believes revenue from Apple's services will remain robust, and the release of new AI features - such as live translation in the Messages and FaceTime apps - could stimulate demand for iPhone upgrades. Goldman still recommends buying the company's securities with a target price of $251 - it suggests upside potential of 20%.

- Wedbush also maintains a buy recommendation with a $270 target, pointing to stable iPhone demand, rebounding sales in China and the strength of the service segment, reports TipRanks. Analyst Dan Ives believes the quarter will be just a "warm-up" before the launch of the iPhone 17. 20% of devices worldwide haven't been updated in more than four years, he recalls.

- Morgan Stanley warns that Apple has a number of risks to overcome - including potential U.S. duties that threaten its operating model. Nevertheless, the investment bank's analysts reiterate a "buy" rating with a $235 target, writes Investopedia.

- Bank of America notes that the combination of slow growth and Apple's high stock valuation is creating a "very negative" market sentiment "amid uncertainty surrounding the impact of duties, a U.S. Department of Justice investigation (related to Google payments), problems with the App Store and slow progress in AI." According to analysts at the bank, investors' main focus will be on gross margins, which Apple itself projected at 46%. That said, they believe that the current quarter will be the "bottom" in terms of margins for the company. Going forward, it will be able to boost iPhone, Mac and iPad sales thanks to new models, BofA analysts predicted and maintain a buy recommendation with a $235 target. 

- Barclays is cautious on Apple shares, but expects the company's performance could slightly exceed last quarter's results - thanks to favorable exchange rates, higher Mac and iPhone sales, and a partial shift in demand amid expectations of duties, writes Investing.com. The bank forecasts 11% year-on-year growth in service revenue. At the same time, analysts warn that a pullback is possible in the second half of the year and maintain an "under market" rating, equivalent to advice to sell the company's securities. Barclays does not see Apple's progress in AI as yet.

- Analyst Peter Andersen of Andersen Capital is also concerned about the company's weak gains in AI, reports Bloomberg. He called Apple Intelligence's AI system "disgraceful" and said the tech giant has "lost its former grip on innovation."  "Apple is rated as a growth company, but I'm very skeptical about the possibility of a significant turnaround in growth rates and think it will eventually lose that premium valuation," Andersen said.

Since the beginning of the year, Apple shares have lost 13%, they lagged behind both the S&P 500 index and almost all players of the "Magnificent Seven" - only Tesla has worse dynamics;

  The company's stock has traded below its 200-day average for 98 consecutive sessions, the longest such period since 2023, according to Bloomberg.         

Ahead of the report's publication on July 31, Apple's quotes were falling by about 0.1%, while the day before they fell by 1% and closed just above $209. Over the week, the company's securities fell in price by 2.3%, which could foreshadow either a new wave of decline or a possible rebound - up to $250, if the report turns out to be strong, indicates TradersUnion. 

Apple is lagging both the broad market and its sector as fundamental risks add to technical weakness, writes TradersUnion. 

The Donald Trump administration's proposal to impose 25 percent duties on iPhones manufactured overseas and tensions between the U.S. and China have forced the company to begin shifting some production to India. While analysts estimate the potential loss at less than $900 million, the risk of supply chain destabilization and increased regulatory pressure have heightened investor wariness.

Adding to the pressure is Apple's AI lag, especially amid more aggressive moves by Asian rivals. The delayed launch of Apple's Intelligence platform and updated Siri is dampening interest in the stock in a year when AI is a major driver of the stock market, stresses TradersUnion. 

While Apple still forecasts service revenue growth of 10.7% and device sales growth of 2.2%, those rates may not be enough to offset external challenges, the publication said.

This article was AI-translated and verified by a human editor