Apple Inc. will release its financial report for the fourth quarter of the fiscal year 2024 ending in late September on Thursday (Friday early morning Beijing time). This will be the first update on iPhone sales and the latest progress of Apple Intelligence since the release of the new iPhone in September. Wall Street analysts expect a very strong performance from Apple this quarter (Note: Apple's fiscal year is not synchronized with the calendar year).

According to FactSet's data, analysts expect Apple's earnings per share for the fourth fiscal quarter to reach $1.60. Net income is expected to reach $24.24 billion, an increase of over 5% year-on-year. Revenue is expected to reach $94.46 billion, with a growth of over 5%, marking the largest quarterly increase in two years.

In particular, iPhone sales are expected to grow by 3.8%, reversing the decline of the previous two quarters. iPad sales are expected to grow by 10.1%, reaching $7.09 billion. The previous quarter saw a growth of 23.7%, mainly due to the launch of a more powerful version of the iPad. Service business revenue is expected to grow by 13.3%, slightly lower than the previous quarter.

By region, about half of Apple's total revenue, $42.23 billion, is expected to come from the Americas, while revenue from the Chinese market is estimated at $16.08 billion, an increase of over 6% year-on-year.

Overall, Apple has had a very strong performance this year. Its stock price has risen by about 25% year-to-date, outperforming the S&P 500 index.

While this quarter may help gauge initial demand for Apple Intelligence, its delayed rollout means analysts may have to wait until at least the next quarter to understand its impact on iPhone sales.

Bank of America (BAC) researchers stated in a report: "With the delayed release of Apple Intelligence, we expect iPhone demand to rebound after the first release of Apple Intelligence at the end of October." Earlier this week, Apple Intelligence was officially introduced as a software update for the iPhone 15 Pro and higher versions.

Demand for the iPhone 16 becomes the focus.

During the financial report meeting, Apple CEO Tim Cook will reveal the latest demand for the iPhone. KeyBanc Capital Markets analyst Brandon Nispel stated that the latest data from U.S. wireless carriers including Verizon, AT&T, and T-Mobile shows a 9% year-on-year decline in iPhone upgrade rates, which is a negative sign for Apple's sales in the U.S. market.

JPMorgan analyst Samik Chatterjee pointed out that since its launch in September, the delivery cycle of the iPhone 16 series has slowed down in the eighth week, with the higher-priced Pro models experiencing a greater pullback. Chatterjee stated: "Although the slowdown is slightly higher than the same period last year, the total delivery cycle is essentially the same as the iPhone 15, indicating that demand still has elasticity, albeit slightly lower than last year's level."

Chatterjee expects that Apple's performance in the fourth quarter will exceed expectations, but the performance in the first quarter of the 2025 fiscal year (ending December 2024) will be below analysts' average expectations. Chatterjee has given Apple's stock a 'shareholding' rating with a target price of $265.

Chatterjee said: "The sales start of the iPhone 16 series is slower than the iPhone 15, although momentum has picked up slightly in recent weeks, sales are still slightly below last year's levels. Therefore, we expect that iPhone revenue for the first quarter of Apple's 2025 fiscal year will be below analysts' average expectations."

Barclays Bank stated that Apple's performance in the third quarter may benefit from the strong performance of the iPhone 15 in the later period, as well as the growth of the service business. iPhone shipments may exceed analysts' average expectations of 51 million units, and service revenue is expected to increase by about 13% to 14% year-on-year, slightly higher than market expectations.

Barclays also believes that due to mixed feelings about the iPhone 16 data, Apple's performance in the first quarter of the 2025 fiscal year may face risks. Barclays stated: "Potential production cuts may affect early 2025 shipments."

Citibank also sees the future challenges for Apple, especially the delayed launch of Apple Intelligence. Citibank stated, "Due to the delay of some functions of Apple Intelligence until next spring, we expect that the overall iPhone sales in the fourth quarter and the first quarter of the 2025 fiscal year will be below Wall Street's expectations." Nevertheless, Citibank remains optimistic about Apple in the 2025 fiscal year, expecting iPhone 17 to drive a strong upgrade cycle.

Apple has managed to regain market share in China. IDC data shows that in the third quarter, Apple ranked second in the Chinese smartphone market with a share of 15.6%, after dropping to sixth place in the second quarter. This is partially thanks to the launch of the iPhone 16. Data indicates that the initial sales of the iPhone 16 are comparable to those of the iPhone 15. IDC stated, "With upcoming promotional activities and the launch of Apple Intelligence, demand for the iPhone will further increase."

Data from research firm Counterpoint Research shows that compared to the iPhone 15 series, sales of the iPhone 16 in the Chinese market increased by 20% in the first three weeks after its release. The data also indicates that Chinese consumers tend to prefer the more expensive Pro and Pro Max models, with sales of these models increasing by 44% year-on-year.

Apple AI triggers a "super cycle".

At the financial report meeting, investors will also closely monitor the latest developments of Apple AI. People are concerned that the slow rollout of Apple Intelligence features may impact the long-awaited "super cycle."

Bernstein analyst Toni Sacconaghi stated: "As we enter the fourth quarter of the 2024 fiscal year and the first quarter of the 2025 fiscal year, the strength of the iPhone 16 cycle is the most important issue. Investors should expect optimism from Apple towards iPhone 16 and Apple Intelligence, but it is still uncertain whether this cycle will ultimately succeed."

Wedbush analyst Dan Ives, who is bullish on Apple in the long term, believes that not only will Apple's performance exceed Wall Street's expectations in the fourth quarter, but the performance in the first quarter of the 2025 fiscal year (ending December 2024) will also be strong.

Ives said, 'We continue to see further signs in the Asia supply chain, indicating that this iPhone upgrade cycle may be a historic one, laying the foundation for a super cycle. We estimate that globally, around 0.3 billion iPhones have not been upgraded in over 4 years.' Ives gave Apple stock an 'outperform' rating and set a target price of $300.

Ives also added, 'We believe that with the continued AI-driven upgrade cycle, Apple's iPhone sales for this fiscal year may exceed 0.24 billion, making it the highest iPhone sales year in Apple's history.'

It is still uncertain whether Apple Intelligence truly helps boost iPhone demand. Although some analysts expect that new AI tools will drive iPhone sales, analysts at Jefferies Financial mentioned in a recent report that this upgrade (including limited hardware features and relatively small AI models) is not enough to significantly boost iPhone sales growth.

Nevertheless, Wall Street still expects Apple's fourth-quarter revenue to reach $94.46 billion, a year-on-year increase of over 5%. Of this, iPhone sales are expected to reach $45.17 billion. Geographically, nearly half of Apple's total revenue, $42.23 billion, is expected to come from the Americas, while revenue from the China market is projected to be $16.08 billion, an increase of over 6% year-on-year.

On Monday, Apple's stock closed at $233.40 per share, up 0.86%. Year-to-date, Apple's stock has cumulatively risen by 21.23%. Over the next 12 months, the average target price for Apple given by analysts is $239.76. Among the 38 analysts tracking Apple stock, 21 have a 'buy' rating, while 11 have a 'strong buy' rating.