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- Apple's fiscal Q3 earnings call is set for Thursday amid tariff and AI challenges.iPhone demand in the US fell in June following tariff-related sales in April and May, analysts said.It's set to open a manufacturing academy in Detroit after promising to invest $500 billion in the US.
Apple investors need some good news on Thursday after a turbulent 2025 so far.
The company had some promising recent signs, but a drop in US demand, a rise in tariff costs, and lackluster Apple Intelligence continue to cast shadows ahead of its earnings report for the third quarter of fiscal year 2025.
Year-to-date, Apple stock is down 16%, badly lagging the top-performing Magnificent Seven stocks.
One bright spot: The tech giant's Hollywood dreams showed promise. "F1: The Movie" is a global box office hit, grossing over $510 million worldwide since its June release and surpassing Apple's earlier original films.
The company also scored a win in the critical Chinese region during the June period by growing quarterly iPhone shipments for the first time since the fourth quarter of 2023, according to estimates from the technology market analyst firm Canalys.
In the US, tariff-related panic buying is expected to have fueled strong growth in April and May before iPhone demand cooled in June, UBS analysts wrote in a note on July 21. They estimated that sales dropped 18% year-over-year in June.
Falling iPhone sales are one of several obstacles facing Apple.
When the company last reported earnings, it warned investors it was expecting $900 million in costs related to tariffs for the June quarter.
Bank of America analysts are bracing for a "fairly negative" investor reaction to Apple's earnings report on Thursday, given uncertainty around tariffs, Apple's position in the AI arms race, and the legal feud with Fortnite maker Epic Games that could eat into some of the fees that its App Store takes from in-app purchases.
The tech giant has also faced pressure from the Trump administration to shift iPhone manufacturing to the US and invest more in the country. To that end, Apple said on Tuesday that it plans to open in August a manufacturing academy in Detroit, where Apple engineers will train workers and businesses on advanced manufacturing and AI.
In February, Apple said it plans to create 20,000 jobs in the US and invest $500 billion in US projects over the next four years.
"Apple works with suppliers in all 50 states because we know advanced manufacturing is vital to American innovation and leadership," Sabih Khan, Apple's chief operating officer, said in a statement on Tuesday.
Apple is set to hold its Q3 fiscal year 2025 earnings call Thursday at 5 p.m. ET.
Here's what Wall Street analysts are saying ahead of the tech giant's earnings.
Bank of America
BofA says investors are likely to focus most on profit margins and guidance for the months ahead amid heightened tariffs. The import taxes will have a "meaningful negative impact" on Apple's margins, analyst Wamsi Mohan said in a July 28 note.
But profits should get a boost from new product launches, Mohan said, like a potential slimmer iPhone Air.
"We expect the slim iPhone to replace the Plus model from last year and be priced $100 higher vs the Plus model," Mohan wrote.
The bank has a $235 price target on Apple stock, implying about 12% upside from current levels. They rate it a "Buy."
Melius Research
Melius analyst Ben Reitzes said to watch out for announcements around AI, such as the rumored possibility that Apple buys Perplexity to help with its upgrade of Siri and help the company play catch-up in the AI arms race.
Such a move could send the share price soaring, he said, as the company looks for ways to make its products' interface smoother for users.
"It does feel like the market would reward Apple for being bolder, which could result in several hundreds of billions in value," Reitzes wrote in a July 21 note.
Melius has a $240 price target for the stock.
Wedbush
Wedbush also said AI will be a major focus, as analysts think Apple is in danger of falling permanently behind in the AI race if it doesn't act soon.
"In the AI Revolution there is an arms race going on between Big Tech stalwarts Nvidia, Microsoft, Alphabet, Amazon, Meta, OpenAI, Oracle and many others to monetize the biggest tech trend in the last 50 years.....while Apple is at a highway rest stop on a bench watching this 4th Industrial Revolution race go by at 100 miles an hour," Dan Ives wrote this month.
Ives said Apple should jump on the Perplexity deal and that if it acts soon, the company can still catch up to competitors. He said such a move would be a "no-brainer" for Apple.
Wedbush has a $270 price target for Apple stock.
Morgan Stanley
Morgan Stanley expects revenue to grow to $90.7 billion in the quarter, 2% higher than Wall Street's consensus estimate. The bullish outlook is thanks in large part to strong iPad sales and iPhone shipments.
But the bank said that the stock would be rangebound in the months ahead until investors see more clarity on tariffs, its AI strategy, and growth in China.
Morgan Stanley analyst Erik Woodring doesn't think AI is as crucial to Apple's strategy as other analysts argue.
"We continue to believe that investors do not fully appreciate Apple's AI intentions — most often comparing what Apple needs to do in AI with what META, GOOGL, AMZN, and others are doing," Woodring said. "Of course, we acknowledge that Apple might not have fully finalized their own approach to AI, but we also believe that anyone thinking Apple will acquire an AI-powered search engine to 'solve their AI shortfalls' is misguided."
Morgan Stanley still has an "Overweight" rating on the stock with a price target of $235.
CFRA Research
CFRA analyst Angelo Zino said arguably the biggest thing to pay attention to is how Apple CEO Tim Cook sounds on the earnings call.
He said that while earnings have upside relative to consensus estimates, guidance will be key.
"The bigger question will be the tone of CEO Tim Cook (not positive last earnings season) and expectations as we look ahead to the Sep-Q/Dec-Q."
The firm has a $210 target for Apple stock, which they rate as a "Buy."
