Going into its fiscal fourth-quarter results - set for release after the close this Wednesday, Oct. 30 - it seems that after a prolonged period of negative headlines, the good times are back for Apple (AAPL). Following a blockbuster response to its lineup of the recently released iPhone 17, the Cupertino-based global consumer tech giant briefly became the latest member of the $4 trillion market cap club, joining the likes of Microsoft (MSFT) and Nvidia (NVDA), as the stock turned positive for the year. AAPL is now up 8% on a YTD basis.
However, questions persist over the company's artificial intelligence (AI) strategy. While the rest of the “Magnificent Seven” - barring Tesla (TSLA), to some extent - are making almost daily notable moves in the revolutionary tech, Apple's strategy around AI remains a relative non-starter, following the somewhat botched launch of Apple Intelligence and underwhelming integration of AI with Siri.
Therefore, the Q4 print becomes even more crucial as the market awaits commentary from CEO Tim Cook and the rest of Apple's management on how the company looks to build on the strong iPhone 17 sales and what it is doing on the AI front, beyond the merely incremental.
Looking Back to Q3
Make no mistake; Apple's financials remain top-notch, marked by consistent earnings beats for years. Fiscal Q3 of 2025 was no different.
In the most recent quarter, the company reported net sales of $94.04 billion, up 9.6% from the previous year. To have an installed base of close to 2.35 billion and still grow revenues at 10% on a YOY basis on a base of close to $86 billion is quite extraordinary and an accomplishment for which the company doesn't get enough credit. iPhone sales went up by 13.4% in the same period to $44.58 billion, with the high-margin services segment growing by 13.3% from the prior year to come in at $27.4 billion.
Further, earnings of $1.57 per share represented yearly growth of 12.1%, while also coming in higher than the consensus estimate of $1.44. Notably, Apple's quarterly earnings have exceeded Street expectations consistently over the past two years.
Coming to cash flows, however, there was a decline in cash generated from operating activities - although, at $81.75 billion for the nine months ended June 30, 2025 (vs $91.44 billion in the prior year period), AAPL is hardly in a liquidity crisis. Overall, the company closed the quarter with a hearty cash pile of $36.3 billion, which was much higher than its short-term debt levels of $19.27 billion.
For Q4, analysts are expecting Apple to report earnings of $1.73 per share, which would denote a YOY growth rate of 5.49% and revenues of $102.2 billion. The estimated revenue figure would mark a yearly growth of 7.7%.
Let the Good Times Roll (Thanks to iPhone 17)
The iPhone 17 has been all the rage. Whether it's because of the new design or an upgrade cycle, the newest model of the highest revenue generator for Apple has been a hit. According to a recent report from Counterpoint Research, the iPhone 17 lineup is pulling ahead of the iPhone 16 in major markets like the U.S. and China, with first-10-day sales climbing about 14% in each region against last year's launch window.
The series benefits from the power-efficient A19 processor, which has lifted battery performance and charging speeds to new levels. That translates to a bigger physical battery offering as much as 30 hours of video streaming, paired with 40W wired fast-charging that cuts down on downtime. On top of that, features once limited to Pro models, like the 120Hz ProMotion display and Always-On functionality, are now standard, delivering noticeably fluid scrolling, quicker touch response, and easy glances at notifications without fumbling for the lock screen.
Demand is also getting a lift from steady pricing on entry-level models, mirroring Apple's approach with the MacBook Air M4 rollout earlier this year, with no hikes to scare off budget buyers.
Separately, Apple is spreading its manufacturing bets as U.S.-China ties stay rocky, with India playing a central role. The company is ramping up iPhone 17 assembly there across the board and has shipped $7.5 billion worth in just four months, doubling the pace from last year's full-year total of $17 billion. This pivot eases reliance on China just as tariffs loom. Even with a proposed 50% levy on Indian exports, CEO Tim Cook's ties to the administration have secured a short-term waiver for key categories like phones and laptops under the latest "reciprocal" trade rules. In a nutshell, then, the iPhones built in India and headed stateside dodge the tariff hit, at least for the moment.
Apple's AI Strategy
With these positive currents building around the iPhone, Apple has a real incentive to lean harder into AI. Sure, the company started a step behind the pack, but its strict stance on data privacy and tailored experiences has set the stage for a more polished second act. In that context, buzz is building around Veritas, an in-house chatbot prototype crafted by Apple teams to sharpen up conversational AI, particularly for Siri upgrades.
From what’s leaking out, Veritas handles threaded dialogues, holds onto chat history for context, manages drawn-out exchanges, and, in controlled tests, taps into user info like emails, music libraries, or photo albums to handle tasks such as editing images or tweaking playlists right within apps. It’s experimenting with an internal architecture called Linwood, blending Apple’s own large language models (LLMs) with select external ones to speed things along, all while keeping privacy front and center.
Analyst Opinion
All things considered, the sentiments around Apple may be on the verge of turning more bullish. The iPhone 17 sales may be the most visible trigger for that. However, the company is making a myriad of moves internally on a strategic and logistical level that could bode well for the long run.
Taking this into account, analysts remain cautiously optimistic about AAPL stock, with an average rating of “Moderate Buy.” Out of 41 analysts covering the stock, 22 have a “Strong Buy” rating, two have a “Moderate Buy” rating, 14 have a “Hold” rating, one has a “Moderate Sell” rating, and two have a “Strong Sell” rating.
The mean target price of $255.09 has already been surpassed, while the high target price of $315 denotes an upside potential of about 17% from current levels.
On the date of publication, Pathikrit Bose did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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