Apple earnings preview: iPhone expectations continue to move lower

Earnings preview

Apple Inc. (NASDAQ: AAPL), total revenues expected for fiscal Q3 have started to tick up slightly from the beginning of last quarter, according to Visible Alpha consensus, from $88.5 billion and back to the $89.3 billion earlier in the year. Sentiment seems to reflect a view that iPhone buying continues to be underwhelming, due to continued weakness in China and fewer users upgrading in the US. Since late January, expected Q3 iPhone units stayed at 45 million and FY 2025 jumped back to 227 million. Currently, Q3 is expected to deliver $40.2 billion in iPhone sales and $202.7 billion in 2025. Overall, large looming questions remain about the impact of tariffs on both their customer base and supply chain, driving full-year iPhone revenue expectations to continue to edge down since the beginning of 2025.

Expectations for the high-margin Services segment remained stable for Q3 at $26.8 billion. The gross margin for the Services segment is over 70%, significantly higher than the 36% gross margin for Products. Given the large installed base, we are looking forward to what the company says in the Q3 earnings release about growth in Services and the role of Apple Intelligence in FY 2025.

Apple stock has been flat since last quarter but is down nearly -10% since late January. The consensus P/E for 2026 is 28x. Could the Q3 release and outlook begin to drive outperformance in the stock?

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This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.