Can upcoming Q2 earnings give Apple’s stock much a much-needed boost?

When will Apple report its latest earnings?

Apple is expected to report its fiscal second quarter (Q2) earnings after the market closes on Friday, 3 May at 6.30am AEST.

Apple's earnings overview

Apple is set to announce its fiscal second quarter results, with analysts projecting earnings per share (EPS) at $1.50 and revenue at $90.04 billion. These figures mark a decrease from last year’s $1.88 EPS and $117.51 billion in revenue, highlighting potential challenges.

Challenges in iPhone sales

Apple is bracing for a weak quarter in terms of iPhone sales, which the company has warned investors to expect. Sales of its flagship product have faced significant headwinds in the crucial Chinese market due to rising competition from domestic smartphone makers as well as national security concerns.

Additionally, consumers globally are holding onto their iPhone devices for longer before upgrading, further weighing on demand and sales growth. With the iPhone representing Apple's biggest revenue driver, this anticipated iPhone sales slump is expected to negatively impact the company's overall performance for the quarter.

However, Apple's continued strong profitability, fuelled by growth in its services segment and a higher mix of consumers opting for premium iPhone models like the Pro line, should help offset some of the weaker sales numbers.

AI developments

While investors are anxious for updates on Apple's artificial intelligence initiatives, no major AI announcement is expected this quarter. The lack of concrete generative AI news has pressured Apple's stock recently, though the company is predicted to unveil its own premium AI offering this summer, emulating its successful "premium follower" strategy.

This approach involves letting others lead the way into new markets initially, before entering later with a differentiated, higher-end product—a playbook Apple used effectively with smartphones and virtual reality headsets.

What do the brokers say?

The investor community is closely monitoring these developments, reflected in the analysts' ratings. Among 42 brokers, 26 recommend buying Apple’s stock, 14 suggest holding, and two advise selling. The median target price stands at $200, indicating an 18% potential uplift from the latest closing price on 25 April.

Apple technical analysis

2024 has been a grim year for Apple’s stock, which has declined sharply even while the Nasdaq 100 continued to make fresh highs in Q1. The price has fallen from its record high in early December at $200, reaching a low of $164.08 on 19 April, a drop of 18%. However, the price closed at the $164.84 low, the same level as the low hit on 26 October 2023. Since then, a small rally has taken place.

In the short-term, the price may head towards the declining 50-day simple moving average (SMA), which it tested earlier in the month and then fell sharply. Just above this is trendline resistance from the January lower high. A close above trendline resistance opens the way to the $178 area, which marked the high in March and April.

A close below $164.08, the April low, then brings the September 2022 high at $163.50 into view, followed by $156.26, which marked a high in October 2022 and February 2023.

Apple daily chart