Apple Stock Reports 'Surprisingly Strong' Quarter: Analysts Say iPhone, Services Offset Tariff Concerns
Could Apple Inc.‘s (NASDAQ:AAPL) surprise quarter be a turning point in the tech race, or is the giant simply playing catch-up with its AI-savvy rivals? Apple analysts highlight a better than expected quarter from the tech giant with third quarter results beating estimates and showing strength for products and services.
The Apple Analysts:
- JPMorgan analyst Samik Chatterjee maintained an Overweight rating on Apple and raised the price target from $250 to $255.
- Needham analyst Laura Martin maintained a Hold rating with no price target.
- Rosenblatt analyst Barton Crockett maintained a Neutral rating and raised the price target from $217 to $223.
- Bank of America analyst Wamsi Mohan maintained a Buy rating and raised the price target from $235 to $240.
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JPMorgan on AAPL: Chatterjee said Apple's financial results were an "unbelievable quarter in many ways," in a new investor note.
"Apple surprised investors with results that defied seasonal trends and marked a significant acceleration in total company revenue growth, iPhone revenue growth as well as Mac revenue growth," Chatterjee said.
The analyst said the results come in a quarter that is traditionally weaker, with consumers waiting for the next iPhone.
Outside of iPhone and products strength, Chatterjee said Apple also surprised on exceeding expectations for the Services segment and providing strong guidance for the segment.
The analyst notes that investors will be monitoring the potential of the iPhone 17 cycle, the outcome of the DOJ vs. Google lawsuit and any changes in tariff rates.
"We believe the upside on results and outlook will limit investor bearishness for the Sep-Q."
Needham on AAPL: The tech giant reported a strong quarter with results that beat analyst estimates, Martin said in a new investor note.
The analyst is concerned that Capex is rising and AI is again pushed out as a key topic for the company.
"We believe that AAPL shares won't work until there is an iPhone replacement cycle," Martin said. "On their FY3Q25 earnings call, AAPL talked about next year's integration of Apple Intelligence, which implies calendar 2025 won't be the year."
Martin highlighted the strength in Apple's Services segment, which hit an all-time high. The analyst also said China growth was a key highlight in the quarterly results.
The analyst said Apple has valuation risk compared to competitors. Here are the revenue year-over-year growth rates in the June quarter for Apple and key competitors:
- Apple: +10%
- Amazon.com Inc (NASDAQ:AMZN): +13%
- Alphabet Inc (NASDAQ:GOOG)(NASDAQ:GOOGL): +14%
- Meta Platforms (NASDAQ:META): +22%
The analyst said Apple's operating margin expansion is also behind competition. Apple is also spending less on Capex, which could suggest falling even further behind in the AI race.
Rosenblatt on AAPL: The third quarter "was surprisingly strong" for Apple, Crockett said in a new investor note.
The analyst said Apple overcame tariffs and missed deadlines on AI feature rollouts.
"Tariff costs were $800M to Apple in the quarter, and Apple still managed to grow gross margin 20 bps Y/Y to 46.5%," Crockett said.
Crockett said Apple showed strength in the iPhone with the spring rollout of a new, lower-cost version, which helped things.
The analyst highlighted commentary from Apple CEO Tim Cook about his openness to acquisitions, which could mean M&A activity in the AI sector.
"The market will confer a premium for Apple's brand strength/durability, we assume," Crockett said.
Bank of America on AAPL: The third quarter was "stronger than expected," Mohan said in a new investor note.
The analyst said the quarter that beat analyst estimates was driven by strong iPhone demand and the company's Services segment.
"We view the strength in iPhone units as encouraging especially as we head into a form factor change in Sep 2025," Mohan said. "With increased focus on AI, Apple could set up well for a strong 2026 iPhone cycle."
AAPL Price Action: Apple stock is down 1.6% to $204.25 on Friday versus a 52-week trading range of $169.21 to $260.10. Apple stock is down 16.3% year-to-date in 2025.
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