Wall Street is cautious on iPhone sales ahead of Apple earnings but analysts hope AI will shine

• Apple's earnings report is under scrutiny amid China iPhone sales concerns and a lackluster AI feature launch.
• Bullish analysts are highlighting Apple's services growth and potential rebound despite the expected China weakness.
• A strong US dollar and competition in China pose challenges, but services and AI offer hope, Wall Street said.

Apple is set to report fiscal first-quarter earnings results after the market close on Thursday, and Wall Street is eagerly awaiting results for the world's most valuable company.

The iPhone maker has been hit by a deluge of downgrades from analysts in recent weeks as concerns grow about slowing sales in China and an underwhelming launch of its Apple Intelligence features.

But Wall Street is mostly defending the company, pointing to potential bright spots in Apple's services business, as well as expanding profit margins during the historically busy holiday quarter.

The average analyst estimate for Apple's earnings per share and revenue in the quarter is $2.35 and $124.03 billion, according to data from Bloomberg.

Here's what Wall Street analysts are saying about Apple's upcoming earnings report.

JPMorgan: Weak China sales, strong dollar could cloud Apple's outlook

Analysts at JPMorgan said Wall Street will be less focused on Apple's fiscal first-quarter results and instead be looking to the company's guidance for clues about its iPhone sales.

The bank said in a recent note that Apple's iPhone market share loss in China will "likely continue with the company already past its product cycle peak and with the consumer subsidies from the local administration to enable smartphone replacement for low to mid-tier phones, which excludes high-end smartphones."

The strong US dollar is also a headwind for Apple and will weigh down profits. JPMorgan observed that consumers have little appetite to pay a higher price for Apple iPhones outside of new product launches, giving the company limited flexibility in softening the blow from the strong dollar.

Despite these headwinds, JPMorgan said it expects Apple to maintain its premium valuation thanks to iPhone's pent-up replacement cycle and its rollout of new AI features.

"Apple remains one of the most favored Edge AI ecosystems to participate in the adoption of Edge AI with its broad presence across smartphones, PCs, and potentially more intelligent Smart Home devices in the future," JPMorgan said.

JPMorgan rates Apple at "Overweight" and lowered its price target to $260 from $265.

Goldman Sachs: A soft start to 2025 will be reversed later this year

Analysts at Goldman Sachs noted that while they expect iPhone shipments to decline by about 4% relative to the year-ago quarter, higher iPhone prices should make up for the shortfall, resulting in 1% year-over-year revenue growth for Apple's flagship product.

The bank is already focused on Apple's upcoming iPhones, which they expect to unlock growth as new AI features are rolled out.

"We're encouraged by the potential for accelerating iPhone growth in F2026 driven by new product innovation for iPhone 17/18 and the continued rollout of Apple Intelligence to new markets with a more robust feature set," Goldman Sachs said in a recent note.

A bright spot in the quarter should be Apple's services business, with app store spending growth to reach an estimated 15% in the quarter with "ample runway for adoption of Apple's services."

While Apple stock saw a rough start to the year in 2025, falling more than 10% in the first few weeks of January, Goldman Sachs expects the stock to post an impressive rebound in the middle of the year.

"Concerns around Apple Intelligence's limited impact on iPhone demand and China competition will likely be replaced by a focus on the new slate of Apple Intelligence features revealed at WWDC 2025, the launch of new Mac, iPad, and iPhone SE products in Spring 2025, and potential for new product features for the iPhone 17/18," Goldman Sachs said.

Goldman Sachs rates Apple at "Buy" with a $280 price target.

Wedbush: iPhone turnaround is possible despite China weakness

Wedbush analyst Dan Ives said in a recent note that the concern over Apple's reportedly weak China iPhone sales is "way overdone."

"Our recent Apple iPhone China checks are mixed to softer, but overall unit declines in the region we see as 'manageable,'" Ives said, adding that he expects the company to meet Wall Street's fiscal first-quarter revenue and profit expectations.

"We also believe Apple should have a strong performance on the services front which is the linchpin to the $4.5 trillion sum of the parts valuation we see over the next 12 to 18 months," Ives added.

Ives said the continued rollout of Apple's AI features is underappreciated by investors. He expects about 20% of the world's population will access AI features via an Apple device in the coming years.

"What the bears continue to miss on Apple is its golden installed base of 1.5 billion iPhones and 2.3 billion iOS devices is unmatched and will create a new AI driven growth story that the Street is not factoring into the stock," Ives said.

Wedbush rates Apple at "Outperform" with a $325 price target.

Barclays: iPhone SE4 delay could hurt the outlook

Analysts at Barclays expect solid sales from Apple's Services and Mac product lineup to offset weakness in its iPhone business.

Barclays also said that its supply chain checks suggest a lower-than-expected volume launch of its upcoming rumored iPhone SE4 phone, which could weigh on the company's guidance for its second fiscal quarter.

"We think the March-Q guidance is the main event. We remain cautious given mixed iPhone data points recently, muted sell-through and more concerns on downward build revisions," Barclays said.

The firm said it expects Apple to sell 3 million iPhone SE4 units in the March quarter, which was below its initial expectations.

Barclays rates Apple at "Underweight" with a $183 price target.

Bloomberg Intelligence: Strong services to blunt China weakness

Apple's earnings results will likely showcase a recurring theme for its investors: weak iPhone sales in China to be offset by double-digit revenue growth in the company's services business.

That's according to Anurag Rana, senior industry analyst for the technology sector at Bloomberg Intelligence.

Weak consumer spending trends in China, combined with increased competition from Huawei, suggest to Rana that the weakness in Apple's China sales will continue into the future.

But iPhone sales in the Americas and Europe should be a bright spot, according to the recent note from Rana.

"A double-digit sales boost in Services will likely be another bright spot, driven by increased App Store use and other ancillary services tied to the recently released iPhone 16 models," Rana said.

Finally, Apple's stock buyback program could be another bright spot for investors, with Rana estimating share repurchase figures of $25 billion to $27 billion in the quarter.