Apple is set to release its Q3 FY’24 results on August 1, with expectations of a strong quarter driven by higher sales in Mac, services, and iPhone categories. Revenue is expected to be around $84.3 billion, a 10% increase from the previous year, with earnings per share at $1.35, a 13% growth. The iPhone business is expected to see modest growth, especially in emerging markets like India, although facing challenges in China. The Mac business is anticipated to perform well as demand recovers post-Covid, while digital services sales are predicted to rise due to higher AppStore sales and subscription services uptake.
Apple is set to launch new generative AI software, named Apple Intelligence, which will include upgrades to Siri, writing assistance tools, calculators, and image processing tools. These features will initially be available on higher-end devices with superior processing capabilities, potentially driving an upgrade cycle for the company. The stock of AAPL has seen significant gains of 75% since early 2021, reaching around $230, outperforming the S&P 500. However, the stock has had inconsistent returns over recent years, underperforming in 2022 but showing strong growth in 2023.
In comparison, the Trefis High Quality Portfolio has consistently outperformed the S&P 500 over the same period, providing better returns with less risk. The current uncertain macroeconomic environment with high oil prices and elevated interest rates raises questions about AAPL’s performance in the next 12 months. Apple is valued at about $202 per share, which is slightly below the current market price, trading at 34x FY’24 earnings. Revenue growth is expected to increase in the next fiscal year, driven by new generative AI offerings and upcoming iPhone updates. Margins are also predicted to improve due to a favorable product mix, higher digital service sales, and lower component costs.
Investors can use Trefis Market Beating Portfolios to make informed decisions based on accurate price estimates. The analysis of Apple’s valuation provides insights into the factors driving the price estimate for the company and how it compares to its peers. Overall, Apple’s Q3 FY’24 results are anticipated to show growth in key business segments, setting the stage for continued success in the future.
