Apple to report Q1 earnings a week after stock hit with multiple downgrades

Apple (AAPL) is set to announce its first quarter earnings after the bell on Thursday amid concerns that iPhone sales aren’t getting the kind of boost from its Apple Intelligence platform that investors initially hoped.

Both Jefferies and Loop Capital downgraded Apple’s stock last week, with Jefferies analyst Edison Lee saying he expects Apple to report lower-than-anticipated results for the December quarter and miss on expectations for the second quarter.

Oppenheimer also downgraded shares on Wednesday, citing slower iPhone growth pressured by competition in China and a lack of AI innovation to catalyze a new upgrade cycle.

According to estimates by IDC and Canalys, overall iPhone market share fell 1% year over year in Q4 to 23% despite the broader market for smartphone shipments increasing by 3%. Apple kicked off its big AI push in October, releasing the first raft of its Apple Intelligence updates.

The software was meant to serve as a key feature to entice consumers to upgrade to the company’s latest and greatest smartphones, the iPhone 16 line, but analysts worry it hasn’t quite pushed users to set out in droves to buy the new phones.

Apple will continue to release Apple Intelligence updates throughout the year, enhancing its capabilities with more useful functions, including the ability to gather information across multiple apps from a single interface. And while that certainly sounds helpful, hardware upgrades like bigger screens, better batteries, and improved cameras are still an easier sell.

For the quarter, Apple is expected to report earnings per share of $2.35 on revenue of $124.1 billion, according to Bloomberg consensus estimates. That would be a jump from the $2.18 per share and $119.5 billion in revenue the company saw in the same quarter 12 months ago.

Apple’s iPhone segment is set to bring in $71 billion, up from $69 billion last year, while its Services segment is set to generate $26 billion in revenue, an increase from $23.1 billion. Greater China revenue is expected to top out at $21.5 billion, higher than the $20.8 billion the region brought in last year.

China has proven to be a persistent area of trouble for Apple over the last two years. Sales in the region declined 8% in 2024, falling to $66.9 billion, and 2% in 2023. At the time, Apple blamed weakness in the renminbi versus the dollar and lower iPhone and iPad sales.

But Apple is set to release a slew of new products in the coming months, according to Bloomberg’s Mark Gurman. That includes a new entry-level iPhone SE, as well as new iPads and MacBook Airs. These products should help drive revenue improvements across its various business segments.

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Shares of Apple are up 24% over the last 12 months, about the same as Google (GOOG, GOOGL), which is up 27%. Nvidia (NVDA), meanwhile, is up 102%, despite a rout on Monday driven by fears that China’s DeepSeek AI platform has upended the need for high-powered AI chips.

Meta (META) is up 69%, while Microsoft (MSFT) has proven to be one of Big Tech’s biggest laggards, rising just 8% over the last year.

Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.

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