Apple Heads Into Earnings This Month With This Analyst Seeing Margin Expansion, 16% Upside Ahead

• Wall Street is largely bullish on the company, with 28 out of 47 analysts covering the stock rating it a ‘Buy’ or higher, according to data from Koyfin.
• Last week, the company pledged a $1.5 billion investment in Broadcom’s manufacturing facility in Fort Collins, Colorado.
• Apple rushed to secure the supply of networking and connectivity chips from Broadcom after absorbing high costs for memory and storage components.

Citi reiterated its bullish outlook on iPhone maker Apple Inc. (AAPL) on Monday and issued positive commentary ahead of the company’s fiscal third-quarter earnings expected at the end of the month.

The firm said it is constructive on AAPL shares heading into the earnings report and expects the company to continue gaining market share even amid a slowing devices market, according to TheFly.

Citi Expects Apple To Report Higher Margins

Citi expects Apple to report higher margins due to recent price hikes across its product portfolio, except for the iPhone, which also prompted its $50 price target increase on the stock. The firm has assigned a price target of $365, implying roughly 16% upside potential as of the stock’s last close on Friday.

Wall Street is largely bullish on the company, with 28 out of 47 analysts covering the stock rating it a ‘Buy’ or higher; 17 rating it a ‘Hold’; and 2 rating it a ‘Sell’ or lower, according to data from Koyfin.

Fiscal AI consensus estimates indicate the company is expected to report earnings per share of $1.89 for the third quarter (Q3), with revenue of $108.9 billion.

Apple Secures Chip Supply With Broadcom

Last week, the company pledged a $1.5 billion investment in Broadcom’s (AVGO) manufacturing facility in Fort Collins, Colorado, and to secure its supply of advanced radio-frequency components and wireless connectivity technologies through 2031. Overall, the agreement with the chipmaker is expected to be north of $30 billion and will support the production of more than 15 billion chips in the U.S., Apple said.

Apple rushed to secure the supply of networking and connectivity chips after absorbing high costs for memory and storage components due to soaring AI infrastructure-related demand.

Outgoing CEO Tim Cook told The Wall Street Journal in June, “Unfortunately, price increases are unavoidable. We’re doing our best to mitigate the huge increases that are being passed to us, and we’ve been trying to shield our customers from the increases, but the situation has become unsustainable.”

Apple Sues OpenAI Over Trade Secret Theft

On Friday, Apple filed a lawsuit in California against Sam Altman-led OpenAI, alleging that the AI startup was engaged in a campaign to steal trade secrets and hardware designs.

Among other allegations, the lawsuit said that Tang Tan, former vice president of product design for the iPhone and Apple Watch, who is now OpenAI’s chief hardware officer, met with OpenAI months before leaving his job in early 2024 and shared secret details about Apple’s suppliers.

Altman took to the social media platform X over the weekend following the lawsuit, saying he is not “afraid of Apple.” In an official statement, OpenAI said it has “no interest in other companies’ trade secrets… We remain focused on building innovative technology that empowers people everywhere.”

AAPL Stock: Retail Sentiment

On Stocktwits, retail sentiment toward AAPL remained in ‘bearish’ territory over the last 24 hours. 

AAPL shares have gained 16% so far this year and 49% over the last 12 months, outperforming the S&P 500.

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