Apple(US:AAPL) Hua Er Jie Jian Wen·2025-07-29 07:47Core Viewpoint - Apple's gross margin guidance for Q3 FY2025 is projected to decline to 45.5-46.5%, down from 47.1% in the previous quarter, primarily due to increased tariff costs [1][2] Group 1: Gross Margin and Tariff Impact - The gross margin for Q3 is expected to include $900 million in tariff-related costs, with a more significant challenge anticipated in Q4, where an additional $1 billion in tariffs could push the overall gross margin down to 45% [2][3] - Bank of America (BofA) forecasts that Q4 will be the low point for gross margins, with a recovery expected in subsequent quarters due to a better product mix and higher average selling prices (ASP) from new product launches [3] Group 2: Revenue and Earnings Expectations - For Q3, BofA estimates Apple's revenue will reach $90.234 billion, slightly above Wall Street's expectation of $89.333 billion, with an EPS forecast of $1.45 compared to Wall Street's $1.43 [4] - Q4 revenue is projected at $99.543 billion, exceeding Wall Street's estimate of $98 billion, with an EPS forecast of $1.66, slightly below Wall Street's $1.67 [4] Group 3: New Product Launches - Apple is banking on the upcoming launch of the ultra-thin iPhone ("iPhone Air") in Fall 2025 to boost ASP and mitigate margin pressures, with a price point $100 higher than the previous Plus model [5][8] - BofA has raised its iPhone revenue expectations for FY2025 from $203.607 billion to $204.507 billion, and for FY2026 from $214.837 billion to $219.987 billion, reflecting the anticipated impact of the new model [8] Group 4: Services Business Outlook - The services segment is expected to maintain low double-digit growth, with Q3 and Q4 projected to grow by 12% year-over-year, driven by revenue from licensing, iCloud, and the App Store [10] - However, the services business faces regulatory challenges, including potential impacts from antitrust investigations and new regulations in the EU, which could affect revenue from the App Store [13] Group 5: Currency Exchange Benefits - A weaker dollar against major currencies is expected to provide a revenue boost, with BofA estimating a 1.31% and 1.38% increase in revenue for Q3 and Q4, respectively, translating to $1.183 billion and $1.374 billion [15] - BofA maintains a target price of $235 for Apple, based on a 29x multiple of the expected EPS for FY2026, reflecting confidence in the company's long-term growth prospects [15]