Apple (AAPL)
Apple, a stalwart in the tech sector, faces a mixed bag ahead of its earnings report on Oct. 31. Analysts’ optimism seems rampant, with numerous upward revisions for earnings per share and revenue. Despite this, the anticipated EPS rise of 6% year-over-year and revenue uptick of 5.3% could be overshadowed by some underlying concerns.
The performance of Apple’s latest iPhone iterations, particularly the AI-capable iPhone 16 and 16 Plus, is crucial. But early sales figures haven’t matched the previous models, pointing to a potential delay in realizing the full potential of these AI-powered devices.
China remains a pivotal market for Apple, yet recent declines in sales highlight a concerning trend. While the launch of iPhone 16 may drive a recovery, the true impact could be a longer game when AI updates come to the fore.
On a brighter note, Apple’s Services segment stands strong with record revenues, leveraging its extensive ecosystem of 2.2 billion active iOS devices.
The Outlook for Apple Stock
Labeling Apple as a Hold prior to its earnings release seems prudent. While short-term growth might sustain the stock’s upward trajectory, surpassing the revised forecasts may prove challenging. Notably, options trading indicates some volatility, with an expected price swing of 4.7% in either direction.
Market sentiment around Apple is moderately optimistic, with the majority of analysts recommending a Buy, pegging the average price target at $248.90 – signaling a potential 7.99% upside.
Microsoft (MSFT)
Conversely, Microsoft looks promising heading into its earnings on October 30. Despite exceeding expectations previously, the stock failed to gain traction. Analysts have tempered their estimates for the upcoming earnings, with downward revisions in EPS and revenue projections for Fiscal Q1 2025.
Recent data indicates downward revisions from analysts—15 out of 21 have adjusted EPS estimates, while all 26 have revised revenue projections. Forecasts for the upcoming quarter stand at $3.10 in EPS (up 3.7%) and $64.54 billion in revenues (up 14.2%).
The prior quarter saw concerns around increased infrastructure spending and margin pressure due to surging demand. Azure, a key driver in Microsoft’s Intelligent Cloud segment, moderated to a 22% growth rate year-over-year. These revised projections offer a more restrained viewpoint on Microsoft’s upcoming performance.