Apple is scheduled to report fiscal Q1 2025 results after the market closes on Thursday, January 30, 2025. Analysts anticipate revenue of $124.38 billion, up 4% YoY, and earnings per share (EPS) of $2.35, compared to $2.18 a year ago. Consensus estimates reflect cautious optimism, driven by steady iPhone demand and momentum in services. However, concerns over China’s smartphone market and Apple’s AI roadmap have weighed on sentiment. Analysts’ average price target stands at $246, implying ~3% upside from Thursday’s intraday price of $238.52. Ratings remain mixed: 10 Buy, 4 Hold, 2 Sell.
- iPhone Revenue: Expected to rise 2% YoY to $70.72 billion, despite slowing growth in China. The iPhone still accounts for ~57% of total revenue.
- Total Revenue: Projected $124.38 billion, marking Apple’s first quarterly growth after four consecutive declines. Services (iCloud, Apple Music, App Store) likely contributed to margin expansion.
- EPS: Forecasted $2.35, up 8% YoY, supported by cost controls and a favorable product mix.
Apple faces mounting pressure in China, its third-largest market (~18% of revenue):
- Competition: Huawei and Vivo gained share in Q4 2024, per Canalys, as Apple’s iPhone shipments fell. Regulatory restrictions block Apple Intelligence features (e.g., AI-powered Siri) in China, limiting product differentiation.
- JPMorgan Downgrade: Analysts warn Apple is “past its product cycle peak” in China and cut their price target to $260 (from $265). Market share losses could persist without localized AI features.
- Wedbush’s Counterpoint: A potential partnership with Baidu, Tencent, or ByteDance to deploy Apple Intelligence in China could revive growth. Wedbush maintains a bullish $325 price target, betting on a turnaround.
Apple’s AI trajectory is a focal point for investors:
- Software Update: iOS 18.3 and iPadOS 18.3, released Monday, enable Apple Intelligence by default on supported devices. Features include enhanced Siri, AI-driven photo editing, and contextual awareness tools.
- Cost Advantage: Unlike peers Meta ($40B+ AI spend) and Microsoft (Azure/OpenAI investments), Apple’s AI expenditure remains modest. DeepSeek’s efficient models (trained at lower cost) suggest Apple could scale AI without heavy capex.
- Market Reaction: Apple stock outperformed AI peers this week, rising slightly as others (e.g., Google, Meta) sold off on DeepSeek competition fears.
- YTD Performance: Down ~5% in 2025, underperforming Nasdaq’s flat YTD return. China concerns and valuation compression (-8% P/E multiple since December) drove declines.
- 12-Month Performance: Shares remain up ~28%, buoyed by AI optimism and a resilient installed base (2.2B active devices).
- Valuation: Trades at 28x forward P/E, a premium to the S&P 500 (20x) but below Microsoft (33x). Bulls argue AI monetization justifies the multiple; bears cite China risks.
Apple’s Q1 report will hinge on three factors:
- China Recovery Signals: Guidance on iPhone inventory and partnership announcements (e.g., Baidu) could ease concerns.
- AI Monetization Timeline: Updates on paid AI features (e.g., premium Siri tiers) would strengthen the bull case.
- Margin Resilience: Services growth and hardware cost controls must offset China headwinds.
Near-Term Catalyst: A China AI deal or stronger-than-expected iPhone 16 pre-orders could reignite momentum. However, prolonged share losses in China or delayed AI adoption pose downside risks. Investors should watch for management’s tone on margins and China during the earnings call.
Disclaimer: This analysis synthesizes third-party estimates and does not constitute investment advice.