Apple (AAPL) is scheduled to report Q3 earnings on Thursday, October 31, and Chinese iPhone demand is in full focus. iPhone sales growth from China could lead to the company’s biggest revenue spike in two years. Investors always pay close attention when Apple prepares to report earnings but as this key date approaches, expectations are especially high. So far, trading has been volatile for Apple stock.
Why Is Apple Stock Dropping?
Despite the promising outlook preceding the Q3 earnings, Apple stock is down today amid high volatility. As of this writing, shares are down 0.9%, likely due to the typical uncertainty that accompanies any important earnings report. However, AAPL stock has mostly performed well over the past week, overcoming difficult market conditions and rising 2%.
Apple has a lot riding on the back of its iPhone sales. As the Wall Street Journal reports, the new iPhone 16 is the key to Apple procuring a share of the booming AI market and not falling behind its competitors. “Big tech rivals can distribute AI widely through their services, while Apple’s hardware-centric business needs its devices as the touchpoint,” the outlet notes.
If iPhone 16 sales are indeed high, it will demonstrate that demand for Apple’s technology is still strong, even if adoption of the Apple Intelligence platform is slow. This new platform marks Apple’s long-awaited foray into generative AI, years after other tech companies began introducing it. The company is counting on sales from China to bolster demand and show investors that it can still emerge as a dominant AI player.
Is Apple Stock a Pre-Earnings Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on AAPL stock based on 23 Buys, eight Holds, and two Sells assigned in the past three months, as indicated by the graphic below. After a 38% rally in its share price over the past year, the average AAPL price target of $247 per share represents a 5.97% change from the last price of $233.39.
As TipRanks reporter Joel Baglole notes, Apple has already released its new AI system as well as a new iMac computer with a powerful new processor. The company has set the stage for a strong earnings report with several key products, but all eyes will be on demand for the iPhone 16. If it is as high as expected, AAPL stock will likely surge and end the year on an extremely high note.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
