Apple’s Q4 Earnings Preview: iPhone 16 Demand, China Market Key

Apple (NASDAQ: AAPL) will report its fiscal fourth-quarter earnings after markets close on Thursday.

This announcement marks Apple’s first update since releasing the iPhone 16 in September. Analysts forecast revenue of $94.58 billion, a year-over-year increase of over 5%, with earnings per share at $1.48, according to data from Visible Alpha. Wall Street anticipates net income of around $22.49 billion, slightly below last year’s $22.96 billion.

A primary driver of Apple’s performance is expected to be iPhone shipments, as the iPhone 16’s release and early demand offer hints at sustained growth.

Analysts at Morgan Stanley recently revised their iPhone shipment estimate for the quarter up to 55 million units, surpassing both their prior target of 52.5 million and the market’s consensus of 50 million units. These strong iPhone figures are expected to offset weaker sales in Apple’s Mac division.

A promising indicator is Apple’s sales performance in China. Counterpoint Research reports a 20% increase in iPhone 16 sales compared to the iPhone 15 during the first three weeks of availability in the Chinese market. This data bolsters the "China iPhone rebound thesis" touted by Wedbush analysts, who suggest Apple is benefiting from increased demand for high-end technology in China. Wedbush believes Apple could be entering an “AI-driven super cycle,” noting that over 300 million iPhones worldwide are ready for an upgrade. This is further supported by the prediction that Apple may collaborate with Baidu, China’s leading search engine, to leverage the growing artificial intelligence market there.

Despite Apple’s positive year-to-date stock performance—up about 20% and closing at $231.41 on Friday—investors appear cautious. The consensus price target from analysts on Visible Alpha sits at $240.87, only 4% above the current share price, indicating a modest growth outlook.