All eyes are on Apple's AI strategy as the smartphone giant gets ready to report Q1 earnings

• Apple's AI strategy is under scrutiny ahead of its first-quarter earnings on Thursday.
• Key updates to watch include memory costs, iPhone sales, and its AI plans, analysts say.
• Some analysts predict a potential rally in Apple shares in the months ahead.

Apple will round out the week's mega-cap tech bonanza on Thursday when it reports earnings for its fiscal first quarter.

With Meta, Microsoft, and Tesla due to report on Wednesday, AI will already be front and center for investors and analysts, and Apple's strategy is expected to be closely scrutinized.

All eyes will be on Apple's AI strategy when itreports after the market close on Thursday.

Thus far, the firm has largely opted out of the massive capex that other mega-cap companies have invested in AI infrastructure. Instead, it's hoped to join forces with already established AI players, recently announcing a partnership with Google's Gemini to boost its Siri voice assistant.

Apple's stock is up about 10% over the last 12 months, lagging the broader market and some of its Magnificent Seven peers. Shares were down about 1% on Wednesday to around $255.

Wall Street expects Apple to report $138.4 billion in revenue for the quarter and earnings per share of $2.68.

Here's what top analysts are saying about the stock leading up to the report, and what they say to watch for when the $3.7 trillion firm reports Thursday afternoon.

Wedbush: An "AI premium" could soon be priced in

Tech analyst Dan Ives said to look for updates on Apple's AI strategy.

"With the company finalizing the choice of Google Gemini to back Siri in its AI strategic push, it's time for Apple to lay down the blueprint to accelerate its AI strategy in 2026 which leads up to a much-anticipated Siri refresh this spring and WWDC in June," Ives said in a client note Wednesday, referencing the World Wide Developers Conference.

He thinks the stock could enjoy a big rally if investors start to apply an AI premium, like they have for other firms who have touted their involvement in the burgeoning technology.

"We believe no 'AI premium' which could be worth $75-$100 per share is factored into Apple's stock at current prices," Ives wrote.

Goldman Sachs: It's a good time to buy

Analyst Michael Ng says Apple will post earnings largely inline with consensus on Thursday, but that the stock is set to rally as the market will soon come around to its AI strategy.

Ng's price target is $320 a share, about 25% upside from current levels.

"AAPL stock is down 5% YTD to start C2026 likely on commodity cost inflation and App Store concerns, but we view the stock weakness as a buying opportunity into a continuation of the iPhone refresh cycle," Ng said in a January 20 note.

"Apple's partnership with Google Gemini for Siri and continued iPhone demand growth against the backdrop of AI-native consumer hardware launches should demonstrate to the market that the iPhone will remain the consumer device of choice for accessing new AI tools, clearing overhangs related to competition."

Morgan Stanley: AI and foldable iPhone will eventually lift the stock

Analyst Erik Woodring said he expects weak stock price action after earnings on Thursday, as he thinks investors will be underwhelmed by iPhone sales numbers.

But he's still bullish on the stock for the year ahead, with a price target of $315 a share.

"Looking beyond the short-term, we continue to believe Apple will outperform in 2026 as it re-launches an upgraded Siri/Apple Intelligence (February '26 and WWDC 2026 in June), introduces its most innovative iPhone in 10+ years (Foldable), becomes first to market with a 2nm-powered smartphone (iPhone 18 family)," Woodring wrote in a client note on Monday.

UBS: Keep an eye on rising memory costs

The bank said that while iPhone sales should be strong, they'll "take a back burner to rising memory costs."

"Despite supply agreements that likely mitigate the impact of rising memory costs in the Mar qtr guide, risk does increase in the June and Sept qtrs as production of the next gen of iPhones ramp, impactings cost and margins," UBS wrote in a January 20 note.

SWBC: Weakness likely ahead

Chris Brigati, SWBC's chief investment officer, said there will be heightened scrutiny on Apple's AI strategy, and there's a risk that investors aren't satisfied with the company's updates to its approach.

"The tone from this week's Magnificent 7 earnings reports should be solid, though not evenly distributed across the group," Brigati said in an email on Wednesday. "Apple, however, faces the toughest hurdle: after a wave of upward estimate revisions, it's the name most likely to struggle to clear the bar, especially as investors raise questions about its AI strategy."