Goldman Sachs released a report forecasting that Apple (AAPL.US) will earn $1.36 per share in the third quarter ending in June, which is higher than the market's expected $1.33 per share, with revenue expected to grow by 4% YoY to $85.1 billion. During the quarter, iPhone revenue is expected to decline by 5% YoY to $37.8 billion, while iPad and iMac revenue are expected to grow by 23% and 13% respectively. Service revenue is expected to increase by 15% YoY.

The bank expects that with the Apple Intelligence AI system and new product innovation driving replacement cycles, iPhone shipments are expected to increase to 0.23 billion, 0.24 billion, and 0.256 billion in fiscal years 2024 to 2026 respectively; the number of Apple devices per iPhone user will also increase, and iMac and iPad will also benefit from AI. As Apple continues to shift toward high-end iPhone models and invest in products and ecosystem for several years, there is an opportunity for price/combination adjustments to achieve price/combination benefits.

The bank raised its average earnings forecast per share for Apple's fiscal years 2024 to 2026 by 1%, reflecting the higher outlook for iPhone revenue in fiscal year 2026. The target price is raised from $238 to $265 and has a 'buy' rating.