AAPL - Apple Q3 preview: iPhone India and AI all in focus

2023-08-02 07:00:00 ET

Apple is slated to report ( NASDAQ: AAPL ) fiscal third-quarter results after the close of trading on August 3 and investors will be looking for the U.S. tech giant to give updates on the iPhone, its status in India and any news related to artificial intelligence.

Wedbush Securities analyst Dan Ives, who has an outperform rating on Apple ( AAPL ), said that recent supply chain checks from Asia should show "at least" in-line results with potential for revenue from the iPhone to top estimates, citing a "clear uptick" in demand in China, along with higher average selling prices.

"It's (sic) unique that this late in the iPhone cycle with iPhone 15 around the corner this Fall, Apple is seeing such strong iPhone 14 demand which will front and center for the Street and the broader tech industry this week," Ives wrote in an investor note.

In addition, Ives said he is expecting that Services revenue should "be on the upswing" heading into fiscal 2024, citing strength in the App Store.

"The entire Street will be laser focused on Apple's quarter as when Cook talks everyone else listens given Apple's unique perch and perspective around consumer demand globally and what this means for the path looking forward," Ives added.

Monness, Crespi, Hardt analyst Brian White, who has a buy rating on Apple ( AAPL ) shares, said he is expecting 1% growth in the quarter, with the tech giant the "best house in a downtrodden neighborhood."

"Although the smartphone industry remains under pressure, we believe Apple can continue to outperform the market at large," White wrote in an investor note.

Additionally, White said that he expects Mac revenue to improve from the 31% decline seen in the previous quarter, while iPad sales are expected to tick down 5% year-over-year.

Conversely, White expects Wearables, Home and Accessories sales to rise 7% to $8.65B.

A consensus of analysts are forecasting Apple to earn $1.19 per share on $81.82B in revenue.

In addition to the all-important iPhone, investors will be looking to hear on how Apple ( AAPL ) is doing in India.

The company has opened its first two official stores in the country - one in Mumbai and the other in New Delhi - and the company's manufacturing partners have been building out capabilities in the country as Apple ( AAPL ) looks to diversify its supply chain and woo customers in the East Asian country to buy its products and services.

On Monday, Bloomberg reported that Foxconn, one of Apple's ( AAPL ) key manufacturing partners, was getting ready to invest $500M in two component factories in the Indian state of Karnataka.

In May, Foxconn, also known as HonHai Precision ( OTCPK:HNHPF ), invested $500M in a new manufacturing space in the Indian state of Telangana, the state's IT minister said.

During its most recent quarter, Apple ( AAPL ) said it generated $6B in revenue from India.

Investors will also be looking for any updates on the company's AI initiatives. During the company's most recent earnings call, CEO Tim Cook said progress on AI needs to be more nuanced than some in the tech space would have people believe.

"I do think it's very important to be deliberate and thoughtful in how you approach these things," Cook said in response to a question related to generative AI.

"And there's a number of issues that need to be sorted," Cook added. "As is being talked about in a number of different places. But the potential is certainly very interesting."

Since then, it has been reported the company has built an internal ChatGPT-style chatbot for its own employees as seeks out a space in the generative artificial intelligence space.

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