Apple Earnings Preview: services strength to offset hardware headwinds

Apple reports earnings on Thursday after Wall Street’s closing bell, with investors expecting a solid but unspectacular quarter as resilient services revenue helps offset softer demand across key hardware categories. While Apple’s fundamentals remain robust, the results come at a time when the stock is trading near record highs, raising the bar for guidance and forward-looking commentary.

iPhone demand under scrutiny as growth moderates

Consensus forecasts point to modest revenue growth, with earnings expected to remain broadly stable year-on-year. The iPhone, which still accounts for roughly half of Apple’s revenue, is once again the focal point. Recent quarters have highlighted uneven upgrade demand, particularly in developed markets, as consumers remain cautious and replacement cycles extend. China remains a key swing factor, with investors watching closely for signs of stabilisation in demand amid intense competition from domestic handset makers and ongoing geopolitical sensitivity.
 
Other hardware segments, including iPad and Mac, are expected to show incremental improvement compared with earlier in the cycle, but growth remains constrained by saturation and limited near-term catalysts. As a result, overall hardware revenue is likely to remain subdued, reinforcing the view that Apple’s growth profile is increasingly reliant on non-hardware segments.

Services and ecosystem strength remain the key support

As with recent earnings cycles, Apple’s services division is expected to provide the main source of stability and margin support. High-margin revenue streams such as subscriptions, payments and digital services continue to benefit from Apple’s vast installed base, helping to smooth earnings even when device sales slow. Investors will be particularly focused on services growth rates and any commentary around regulatory pressure, pricing power and user engagement, especially in the US and Europe.

Beyond near-term numbers, attention will also be on Apple’s positioning in artificial intelligence. While Apple has taken a more measured approach compared with some peers, markets are increasingly focused on how AI functionality can be embedded into the ecosystem to drive engagement, differentiation and future monetisation.

Apple shares consolidate near record highs

Apple shares have enjoyed a strong run, supported by optimism around rate cuts, defensive earnings characteristics and confidence in the company’s long-term ecosystem strategy. However, momentum has cooled in recent weeks, with the stock consolidating below its recent highs. From a technical perspective, Apple remains in a broader uptrend, but near-term direction may hinge on whether earnings and guidance are strong enough to justify current valuations.

Apple Inc daily chart
 
Past performance is not a reliable indicator of future results.

Key support is seen around recent breakout levels with the range between $243 and $246 in focus, where buyers have previously stepped in, while resistance remains near record highs. A convincing break higher would likely require clear upside surprises or a more confident growth outlook, while any disappointment could trigger a period of consolidation or pullback.