Apple is expected to post its strongest June-quarter revenue growth in five years when it reports earnings, driven by strong iPhone sales and a pricing strategy that gave it an advantage over competitors.
Analysts expect the company to report revenue of $108.65 billion for the April to June period, Apple’s fiscal third quarter. That would represent a 15.5% increase from the same period last year, according to data compiled by LSEG.
The expected performance comes after Apple chose to keep iPhone prices unchanged, even as it increased prices for some MacBook and iPad models last month.
The company made those changes to offset higher costs of memory and storage chips linked to high demand from AI data centre projects.
Unlike several smartphone makers that passed expenses on to buyers, Apple left iPhone prices untouched. That decision appears to have worked in its favour.
Research firm Counterpoint estimates that global iPhone shipments increased 3% during the quarter, lifting Apple’s smartphone market share to nearly 20%.
The profit came as worldwide smartphone shipments fell to their lowest April-to-June level in 13 years after high cost of components pushed up prices across the industry.
Samsung and Xiaomi were among manufacturers that raised smartphone prices during the period, contributing to weaker consumer demand. Apple’s decision to avoid similar increases helped it attract more buyers.
While other technology companies have committed hundreds of billions of dollars to AI infrastructure, Apple has largely stayed out of that spending race.
That strategy has improved investor confidence in the company at a time when questions are growing over whether massive AI investments will deliver enough returns.
Apple shares have increased nearly 25% this year and briefly pushed the company’s market value above $5 trillion on Tuesday. The rally has helped Apple regain its position as the world’s most valuable listed company, overtaking Nvidia after two years.
“Apple was initially scorned by many investors for not joining the AI investment cycle. Now, it is actually being rewarded as investors question the relationship between (Big Tech’s) spending and return on investment,” said Dan Morgan, portfolio manager at Synovus Trust, which owns Apple shares.
The focus on AI spending has grown after Alphabet last week reported negative free cash flow for the first time in its history.
Despite the expected rise in revenue, analysts believe Apple’s profit growth will slow slightly. Net profit is forecast to increase 18.1% to about $19.7 billion, while gross margin is expected to fall to 47.9%, down from 49.3% in the previous quarter.
The company is still expected to record strong growth across most of its hardware business.
Analysts forecast iPhone revenue to rise 20.8%, marking its strongest fiscal third-quarter growth since 2021. Mac revenue is expected to grow 8.7%, up from 5.7% in the previous quarter despite higher prices. iPad revenue growth, however, is expected to ease to 5.2% from 8%.
Many investors are now looking beyond this quarter to Apple’s next iPhone launch, which is traditionally held in September.
Analysts widely expect the company to increase iPhone prices with the new lineup after already raising subscription prices for Apple Music and the Apple One bundle earlier this month.
Dan Morgan believes higher iPhone prices could eventually weaken demand and increase pressure on Apple, especially because its current valuation leaves “a lot of room for error.”
Even so, some analysts believe Apple customers are likely to absorb moderate price increases because of the company’s strong ecosystem and customer loyalty.
Morgan Stanley analysts said: “Apple’s core product demand has been somewhat inelastic, with iPhone being the most inelastic product within Apple’s product ecosystem, followed by Mac and then iPad.”
“This generally means that recent price increases are unlikely to materially disrupt demand, especially considering supply challenges at peers.”
