Apple Stock Now A ‘Show-Me’ Story, Says Munster: Retail Hopes For AI Breakthrough After ‘Excellent’ Q3

Apple, Inc. (AAPL) stock rose early Friday as traders cheered the tech giant’s surprisingly strong quarterly results.

Bullish analysts, however, described the stock reaction as “muted” in comparison to the strong quarterly report. Deepwater Asset Management’s Gene Munster said the stock has now become a “show-me” story, as it rose only by 2% despite the June quarter results and the September quarter outlook being the strongest in more than three years.

“Investors are worried the party will end as tariffs, regulatory changes, and Apple’s AI strategy come back to weigh on growth,” he said, adding that “I believe the disconnect between the fundamentals and the stock will be short-lived.”

The venture capitalist expects Apple’s stock multiple to rerate higher if the company grows revenue by more than the 5.5% rate estimated by Wall Street and delivers a powerful new Siri by the fiscal year 2026.

Apple stock is down about 17% for the year-to-date period.

Wedbush analyst Daniel Ives, an Apple bull, lauded Apple for its “much better-than-expected” quarterly results, characterized by strong top- and bottom-line beats. The analyst noted that iPhone and the Services business drove the strength. 

The significant improvement seen in the key China region, ahead of the iPhone 17 launch, bodes well for the company, the analyst said. “This was a major step in the right direction for Cook and Cupertino with China, the star of the show," he added.

Apple’s China revenue climbed over 4% year over year (YoY) to $15.37 billion in the third quarter of the fiscal year 2025.

Commenting on the results, CEO Tim Cook said, “Apple is proud to report a June quarter revenue record with double-digit growth in iPhone, Mac and Services and growth around the world, in every geographic segment.”

iPhone revenue climbed 13.5% YoY to $44.58 million, exceeding the $40.01 million consensus estimate. All product categories reported above-consensus revenue, except for the iPad.

Cook stated on the earnings call that the company reached the milestone of shipping its three billionth iPhone during the quarter, according to a transcript from Koyfin.

Delving into the outlook, CFO Kevan Parekh said the September quarter revenue will likely grow in the mid-to-high single digits YoY versus the 7% growth Street is forecasting. The company expects the Services revenue to grow at a similar pace in the third quarter.

“We expect gross margin to be between 46% and 47%, which includes the estimated impact of the $1.1 billion tariff-related costs,” he added.

The third-quarter earnings per share (EPS) of $1.57 and revenue of $94 billion notably exceeded the Fiscal-ai-compiled consensus estimates of $1.43 and $89.16 billion, respectively.

Cook also underlined the company’s thrust on artificial intelligence (AI). Answering an analyst’s question, he said, “We are also reallocating a fair number of people to focus on AI features within the company … we have a great team, and we're putting all of our energy behind it.”

On Stocktwits, retail sentiment toward Apple stock climbed to ‘extremely bullish’ (80/100) by early Friday from the ‘neutral’ mood seen a day ago. The retail chatter also grew to ‘extremely high’ levels.

A bullish watcher sees a slow grind in the stock to the $230 level in the next two weeks.

Another user called the earnings report “excellent” and said, “Now time for Apple to solve AI.”

In Friday's early premarket session, the stock was up about 2% at $211.72.

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