According to Goldman Sachs, Apple’s iPhone sector sales is predicted to drop 11% in Q2

Preview of Apple Inc.’s Q2 profits: Global investment bank Goldman Sachs predicts that Apple Inc. will report earnings per share (EPS) of $1.53 on sales of $90.7 billion for the second quarter of its fiscal year 2024. However, challenges are anticipated for the iPhone market, where revenue is predicted to fall by 11% year-over-year (Y-o-Y) as a result of difficult comparisons to prior years. Despite this, it is anticipated that Mac revenue will essentially be constant each year due to the introduction of new MacBook Air models.

Furthermore, due to difficult year-ago comparisons, decreases are anticipated in the Wearables, Home, and Accessories (-6%) and iPad (-17%) categories year-over-year. Positively, it is anticipated that service income will climb by 14% year over year because of rising service prices and robust App Store spending.

Goldman Sachs predicts EPS of $1.29 on $82 billion in sales for the third quarter of the fiscal year 2024, which is somewhat less than average predictions. Analysts predict that Apple will report flat year-over-year revenue growth for the third quarter, with an increase in iPad revenue from new product releases and sustained service revenue growth offsetting reductions in iPhone revenue.

With anticipation of Apple guiding below consensus, Goldman Sachs feels that a likely guidance failure for the June quarter might be the “final cut.” The company’s third-quarter iPhone sales expectations are less than the average estimate, which is indicative of persistent issues including the fierce competition in China and the lacklustre iPhone 15 product cycle.

Analysts, however, believe that the June quarter results might signal a shift in public perception, particularly in light of impending events like the September release of the iPhone 16 and Apple’s Worldwide Developers Conference (WWDC) in June 2024.

Goldman Sachs emphasises recent research papers released by Apple researchers about AI features, showing an emphasis on enhancing on-device AI frameworks and mobile user interface understanding. According to analysts, these advancements may open the door for cutting-edge AI-powered capabilities like predictive text and AI-enhanced picture and video editing.

Goldman Sachs is upbeat about Apple’s long-term prospects despite short-term difficulties, particularly with the anticipated release of the iPhone 16 and new product innovations fueling unit growth. In addition, indications of stabilising in the worldwide PC and smartphone markets provide good conditions for Apple’s future success.