Apple(US:AAPL) Zhi Tong Cai Jing·2025-10-27 08:07Core Viewpoint - Apple is expected to report strong Q4 earnings, with projected revenue of $101.7 billion and earnings per share of $1.76, reflecting solid growth compared to the previous quarter [1] Group 1: iPhone 17 Demand and Market Sentiment - Strong demand for the iPhone 17 is driving optimistic expectations, with sales in the first ten days post-launch up 14% compared to the iPhone 16 series [2] - Market sentiment has improved, pushing Apple's stock to a historical high, bringing it closer to becoming the third company to surpass a $4 trillion market capitalization [2] - Evercore ISI anticipates that Apple may exceed current market expectations for Q4 and provide an optimistic outlook for Q1 2026, citing strong iPhone-related data [2] Group 2: Service Business Expansion - Apple's expanding service business, which includes iCloud, Apple Music, and the App Store, now accounts for about one-third of total revenue and has a gross margin of approximately 75% [3] - The growth of the service segment is seen as a strategic buffer against hardware market challenges, with expectations of continued double-digit growth [3] - Analysts highlight a strong long-term product roadmap, including upcoming innovations like "Siri 2.0" and next-generation home devices, which could provide new revenue streams [3] Group 3: Analyst Divergence on Short-Term Outlook - While the overall sentiment is optimistic, some analysts, like Jefferies, maintain a cautious stance, projecting Q4 revenue and operating profit to be about 4% below Wall Street consensus [4] - Jefferies has lowered its price target for Apple from $205.16 to $203.07, citing concerns over product sales outside of iPhones and new tariff worries [4] - Other firms, such as Evercore ISI and Loop Capital, remain confident, with Evercore reaffirming a "buy" rating and a target price of $290, while Loop Capital upgraded its rating based on stronger-than-expected iPhone demand [4] Group 4: Strong Fundamentals Amid Short-Term Concerns - Despite uncertainties related to tariffs and competition in China, analysts believe Apple's high-margin service business and premium hardware provide a unique buffer against volatility [5] - Strong cash flow, strict cost management, and a growing ecosystem are seen as key advantages for Apple in a challenging global market [5] - Early data suggests a successful new sales cycle for iPhones, with new products on the horizon, positioning Apple to maintain its leadership in the tech industry [6]