Key Moments
- Goldman Sachs argued that recent downside in Apple shares does not reflect the company’s relative strength and outlook.
- The bank projected fiscal second-quarter EPS of $2.00 for Apple, exceeding the consensus estimate of $1.93.
- Goldman Sachs highlighted Services growth, advertising expansion, and upcoming product and AI announcements as potential catalysts.
Apple Stock Lags as Market Focuses on Margin and Demand Risks
Investing.com — Goldman Sachs is challenging the negative narrative around Apple Inc., as investors position ahead of the company’s fiscal second-quarter earnings release. The firm said the recent weakness in Apple shares has been driven by worries that are not aligned with the company’s underlying fundamentals.
Apple’s stock has declined on a year-to-date basis, while the S&P 500 has advanced 2%. The underperformance has been tied to market concerns about pressure on smartphone gross margins and the risk that sharply higher DRAM prices could erode demand.
Analyst Michael Ng countered that view, saying, “concerns for Apple are overly pessimistic given its much stronger relative position.”
Goldman Sachs EPS Outlook and Segment Expectations
Goldman Sachs forecast fiscal second-quarter earnings per share of $2.00 for Apple, topping the Street consensus of $1.93. The bank anticipated that results would come in ahead of expectations across several key areas, including iPhone revenue, Mac revenue, and overall gross margins.
The firm also expected Apple to benefit from favorable foreign exchange movements and robust growth in its Services segment, both of which were seen as supportive to near-term performance.
Services Growth Drivers and Future Advertising Upside
Within Services, Goldman Sachs projected year-on-year growth of 14%, even while acknowledging that the App Store had experienced another sluggish quarter. The bank pointed to multiple contributors to this growth, including iCloud+, AppleCare+, the impact of prior price increases on Apple TV+, and what it described as solid advertising trends.
Looking further out, Goldman Sachs identified additional upside from the expansion of advertising inventory within the App Store and Maps, viewing these areas as incremental tailwinds for Services revenue.
Recent Data Points Supporting the Thesis
Goldman Sachs referenced several recent indicators to support its constructive stance. Among them were signs of high-end smartphone outperformance highlighted by TSMC on its latest earnings call, reported gains in iPhone market share in China, and indications that Apple has been actively securing mobile DRAM supplies while maintaining competitive pricing.
Upcoming Catalysts: WWDC, AI Siri, and New iPhone Lineup
The bank also outlined a series of potential catalysts that it believes could alter sentiment toward Apple. These included the upcoming WWDC event, where new AI capabilities for Siri are expected to be showcased.
Further out, Goldman Sachs pointed to the next fall iPhone lineup as another key milestone, describing it as likely “the most innovative ever with the introduction of the iPhone Fold.”
Summary of Goldman Sachs View on Apple
| Aspect | Goldman Sachs View |
|---|---|
| Share performance vs S&P 500 | Apple shares down year-to-date vs a 2% gain in the S&P 500 |
| Key market concerns | Smartphone gross margin pressure; potential demand impact from higher DRAM prices |
| Fiscal Q2 EPS estimate | $2.00 vs Street consensus of $1.93 |
| Anticipated outperformance | iPhone revenue, Mac revenue, gross margins |
| Services growth forecast | 14% year-on-year, despite another slow App Store quarter |
| Services growth drivers | iCloud+, AppleCare+, prior Apple TV+ price increases, advertising |
| Additional tailwinds | Expansion of ad inventory in App Store and Maps |
| Supporting data | High-end smartphone strength at TSMC, iPhone share gains in China, competitive mobile DRAM sourcing |
| Future catalysts | WWDC (AI Siri features), fall iPhone lineup with “the most innovative ever with the introduction of the iPhone Fold” |
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