Apple's Q2 Earnings Preview: Services vs. iPhone Sales

Apple's upcoming Q2 earnings report on May 1 is being scrutinized as competition impacts iPhone sales in China. Analysts expect a strong performance from Services which could offset these pressures. Investors should closely watch how these dynamics play out.

Date: 01-05-2025

AI Rating: 6

Apple's anticipated second-quarter fiscal 2025 earnings report on May 1 is drawing attention due to competitive pressures in the Chinese smartphone market. The upcoming earnings release is expected to reflect both challenges and opportunities in different segments of the company's portfolio.

Earnings Per Share (EPS) and revenue growth will be central to investor sentiment. iPhone sales are projected to hit $46.45 billion, reflecting a modest 1.1% year-over-year growth. This is a critical area as it demonstrates the market's response to competition from local manufacturers like Huawei and Xiaomi. Investors might view this slight growth as neutral but concerning in the long term if such competition persists.

On the other hand, Apple's Services revenue is expected to show stronger performance with an estimate of $26.76 billion which would indicate a robust 12.1% growth year-over-year. This segment has increasingly become a revenue driver and will be key to offsetting revenue contraction in iPhone sales, thus perceived positively by investors.

Apple's Mac and iPad sales also show promising year-over-year estimates, with Mac sales expected to reach $7.79 billion (4.6% growth) and iPad sales at $5.92 billion (6.5% growth). This is essential as it indicates demand across other product lines, further balancing the overall performance.

Despite a generally cautious outlook due to the iPhone segment's challenges, the strong expected growth in Services and other hardware could provide a buffer for investor confidence. Investors should be aware of the Earnings ESP of -0.85% for Apple, indicating a potential earnings miss based on consensus estimates.

Stocks: AAPL