Shares of Apple Inc (NASDAQ: AAPL), the largest company in the world, have seen an impressive year-to-date performance up over 16%. One analyst highlighted matters to look out for ahead of its third-quarter earnings report on August 1.
The Apple Analyst: Bank of America analyst Wamsi Mohan reiterated a Buy rating for Apple in a note published Monday (July 29); the price target remained at $256.
Apple Takeaways: Mohan predicts third-quarter revenue of $84.5 billion and EPS of $1.35. This is slightly higher than Wall Street estimates of $84.4 billion and $1.34 respectively. However, the analyst believes investors will closely watch management commentary on artificial intelligence (AI), Chinese market share and services revenue.
Apple impressed analysts with its June announcement of "Apple Intelligence," an AI-powered addition to the Cupertino, California-based company's software. A report on Sunday revealed that Apple will not ship its first Phone 16s, likely to be released this fall, with AI features. Instead, it will gradually roll out the features as the technology becomes more stable.
Mohan sees AI as a top-line revenue driver.
"We see pent-up demand and a meaningful number of older iPhones in the installed base, and the new AI features should help drive an upgrade cycle," the analyst said.
Mohan kept fiscal year 2025 revenue estimates largely unchanged while increasing 2026 estimates. The analyst expects an average sales price increase.
"We expect this iPhone cycle to remain strong for longer as AI feature sets (software and possibly hardware) improve in the C25 iPhone (iPhone 17). Given the staggered rollout of Apple Intelligence across regions, we expect the U.S. to be the first to upgrade and then EU/China to follow later in the cycle."
The analyst expects an upside in 2025 for new iPads, Macs and wearables after weaker spending cycles.
Price Action: Shares of Apple were trading roughly even on Monday at $217.61, up 0.30%.