Apple approaches Monday's fiscal fourth-quarter results with investors divided over the value of the company's defensive characteristics, including modest AI spending and strong cash flow. Apple is due to release results after U.S. trading ends on November 2. Analysts forecast $113.39 billion in revenue. Analysts expect earnings per share of $1.99.
Needham analyst Laura Martin maintains a Hold rating on Apple. Martin said limited AI capital spending, substantial free cash flow and ongoing returns to shareholders are supporting Apple. Martin told CNBC on Monday that iPhone revenue would reach about $56 billion. Martin forecast roughly $31 billion in Services revenue, with a margin of about 75%. However, Martin anticipated overall margins would contract by about 300 basis points because memory costs have risen sharply. Martin said investors should monitor whether new CEO John Ternus increases iPhone prices or accepts cost pressure that could slow earnings-per-share growth over time.
Martin described Apple's installed base of 2.5 billion devices as a substantial competitive advantage. However, Martin said Alphabet's Google, Meta Platforms and other AI companies are seeking to move computing from smartphones to products such as glasses. Martin said the iPhone remains Apple's central product and generates roughly half of total revenue. Martin identified China as a significant risk, noting that China accounts for about 20% of iPhone sales.
Bernstein analyst Mark Newman told CNBC on Saturday that Apple offers defensive protection within technology because Apple avoids the roughly $100 billion-plus annual AI capital spending of some peers. Newman cited Apple's capital spending of roughly $13 billion last year. Newman put Apple's capital spending this year at about $11 billion. Newman also highlighted rising earnings, free cash flow and ongoing share buybacks. Newman argued that this spending profile leaves Apple less exposed to losses if the wider AI investment cycle weakens. Newman said Apple remains an important route for consumers to access AI because users will probably rely primarily on phones. Newman expects smartphones to retain relevance as wearables advance because wearables still require processing power, battery capacity and a connected computing platform.
MoffettNathanson analyst Craig Moffett recognized Apple's defensive attractions but argued that investors may already be overpaying for that protection. Moffett told CNBC on Saturday that Apple's valuation of about 36 times forward earnings looked demanding. Moffett said that multiple corresponds to an earnings yield of roughly 2.8%. Moffett identified increasing memory costs as another potential source of pressure. Moffett said Apple has already raised prices for base devices by about $100. Moffett said U.S. wireless carriers have maintained discipline on promotions. Moffett argued that customers retaining older iPhones, rather than necessarily switching to Android, pose Apple's biggest competitive threat. Moffett warned that higher prices could postpone consumer upgrades by several months and weaken future device demand.
Apple represents 9.70% of the Invesco S&P 500 Momentum ETF (SPMO). Apple has a 9.89% weight in the Principal U.S. Mega-Cap ETF (USMC). Apple represents 9.65% of the MicroSectors FANG+ 3x Leveraged ETN (FNGU). Significant inflows or outflows in these heavily exposed funds will likely trigger automatic purchases or sales of Apple shares. Benzinga Pro data showed Apple trading at $339.05 on Monday, down 1.62% at publication.
Apple Faces Valuation Concerns Amid Upcoming Earnings Report
BenzingaShare
Summary
Apple is set to report Q4 results on November 2, with analysts forecasting $113.39 billion in revenue and $1.99 earnings per share. On-chain trading signals show mixed sentiment as analysts debate whether Apple’s valuation is justified. Laura Martin of Needham cited the 2.5 billion device base and strong Services revenue, but warned of margin risks. Mark Newman praised Apple’s low AI spending, while Craig Moffett noted a forward P/E of 36 and potential price pressures. China and upgrade cycles remain key risks for support and resistance levels.
Source:Show original
Disclaimer: The information on this page may have been obtained from third parties and does not necessarily reflect the views or opinions of KuCoin. This content is provided for general informational purposes only, without any representation or warranty of any kind, nor shall it be construed as financial or investment advice. KuCoin shall not be liable for any errors or omissions, or for any outcomes resulting from the use of this information.
Investments in digital assets can be risky. Please carefully evaluate the risks of a product and your risk tolerance based on your own financial circumstances. For more information, please refer to our Terms of Use and Risk Disclosure.