Overview
Apple is set to release its earnings report on November 2, with expectations for quarterly revenue to exceed $113 billion and earnings per share (EPS) of $1.99. Investors are keen to see if strong iPhone sales and high-margin services can counterbalance rising costs and supply constraints.
Quarterly Expectations
The upcoming report will cover Apple's fourth fiscal quarter, which ended in September. This quarter is significant as it will include initial sales of the iPhone 18 Pro, while the iPhone Duo's October launch will impact future reports. Management's insights on the holiday season will be crucial.
The analyst consensus anticipates revenue of $113.44 billion, reflecting a year-over-year growth of approximately 10.7%. Apple previously guided for revenue growth of 9-11% and a gross margin of 47-48%. The previous quarter's results were bolstered by tariff refunds, which complicates the interpretation of the upcoming figures.
Performance Metrics
In the last reported quarter, Apple achieved approximately $109.4 billion in revenue, with diluted EPS of $2.02. However, it was noted that tariff refunds contributed significantly to these figures, suggesting that the underlying profitability may not be as strong as it appears.
Sales were primarily driven by the iPhone, which saw a revenue increase of about 22% to $54.25 billion. The Mac also performed well, with a 29% revenue increase to $10.35 billion. Services revenue rose to $30.74 billion, marking a 12% year-over-year increase, with a notably high gross margin of 75.6% compared to 40.1% for products.
Challenges Ahead
Despite strong sales, Apple faces rising development costs, with R&D spending increasing by 32% to $11.73 billion and total operating expenses rising by 23% to $19.08 billion. This growth in expenses outpaces revenue growth, raising concerns about profitability sustainability.
Additionally, component availability remains a challenge, particularly in advanced chip production. Tim Cook has highlighted constraints in this area, which could impact Apple's ability to meet demand and deliver devices, further complicating revenue projections.
Market Reaction
As of October 27, Apple shares closed at $347.10, having recently reached an all-time high of $351.73. The upcoming earnings report could influence whether this upward trend continues or if investors will begin to take profits. Since the start of 2026, AAPL shares have gained over 27.49%.
Leadership Transition
This earnings report will also be the first under new CEO John Ternus, who took over from Tim Cook on September 1. The new leadership will need to navigate the challenges of rising costs and supply constraints while maintaining strong hardware sales. The key will be whether Apple can sustain its improving results without relying on one-off benefits.