Apple (AAPL) Earnings Preview: Investors Eye Record Revenue and AI Updates Amidst Market Jitters

[Ben Graham]

• Wall Street expects a record quarter for Apple with ~$138.5B in revenue and a focus on the iPhone 17 "supercycle" and Services growth.
• Key areas of scrutiny include a potential rebound in China sales and updates on the long-term AI Strategy.
• Bullish Scenario: A "beat and raise" could push the stock toward $270-$288.
• Bearish Scenario: Missing high iPhone expectations or weak guidance could cause the stock to break below critical support at $206-$210.

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As Apple Inc. (AAPL) prepares to report its fiscal first-quarter 2026 results on Thursday, January 29 after market close.

Wall Street will be watching with intrigue no doubt as despite a sluggish start to the year for the stock, which is down roughly 6-9% year-to-date expectations are high.

Analysts project the tech giant will deliver its largest year-over-year revenue jump in four years, driven by a robust holiday season, the iPhone 17 cycle, and double-digit growth in its Services division.

What to Expect?

Wall Street consensus points to a record-breaking quarter for Apple.

• Revenue: Analysts expect revenue to land around $138.5 billion, representing a growth rate of approximately 10-12% year-over-year. This would easily eclipse the previous record of $124.3 billion set in Q1 2025.
• Earnings Per Share (EPS): Consensus estimates for EPS are pegged at $2.67, up roughly 11% from $2.40 in the year-ago quarter.

Gross Margin: Investors will look for margins to remain steady between 47-48%, though any impact from rising memory costs or tariffs will be scrutinized.

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Source: Created by Zain Vawda, Google Gemini, Data Source from LSEG, Yahoo Finance

Key Areas to Focus On - Segment Performance Analysis

While the headline numbers are critical, the narrative during the conference call specifically regarding future demand and AI will likely dictate the stock's immediate reaction.

1. iPhone 17 Demand and the Supercycle The iPhone remains the engine of Apple’s profitability, and Q1 covers the critical holiday sales period. Analysts forecast iPhone revenue to surge by over 12% to approximately $78-$80 billion.

The "supercycle" thesis relies heavily on the iPhone 17 significantly outperforming its predecessors. Early data suggests strong demand for the Pro models, and investors will want confirmation that the upgrade cycle is accelerating, particularly among the estimated 300+ million users with iPhones older than four years.

1. The China Rebound China has been a battleground for Apple, facing stiff competition from domestic rivals like Huawei and a mixed economic backdrop. However, recent data offers a glimmer of hope: Counterpoint Research indicates Apple may have led the Chinese smartphone market in Q4 with over 20% market share.

A confirmed rebound in Greater China revenue would be a major bullish signal, alleviating fears that Apple is losing its grip on its most important international market.

1. Services Growth The Services segment (App Store, iCloud, Apple TV+, etc.) is Apple’s profit growth engine. Wall Street is looking for revenue to hit roughly $30 billion, implying ~14% growth.

Sustained double-digit growth here is vital to justify Apple’s premium valuation (approx. 30x forward earnings). Any deceleration could spook investors who view Services as the company's safety net against hardware cyclicality.

1. AI Strategy and "Apple Intelligence" Artificial Intelligence remains the "wild card." While Apple has been quieter than its peers, the integration of "Apple Intelligence" and the partnership with Google (Gemini) to power Siri are central to the long-term thesis.

Market participants will listen intently for updates on consumer adoption of AI features and, more importantly, how Apple plans to monetize them. Commentary on future capital expenditures related to AI servers will also be key.

The path forward is not without significant obstacles. The global memory shortage, the ongoing DOJ antitrust trial, and the complexities of the European regulatory environment present real risks to the company's operating model. The "trillion-dollar tightrope" involves balancing these external pressures while continuing to deliver the "quality and resilience of earnings" that investors have come to expect.

If Apple can demonstrate that it has successfully harnessed the power of generative AI to drive both hardware upgrades and high-margin recurring fees, its premium valuation may be well-justified for years to come.

The more seasoned market participants are watching three main things: whether the sales recovery in China will last, how many people are buying the new AI-powered Pro phones, and the company's plan to make Siri the main controller of a system that is so connected, users will find it very hard to leave.

Potential Implications for the Stock Price

Apple stock is currently trading near a technical support level, testing its October 2025 lows. The market sentiment has been cautiously optimistic, but valuation concerns persist.

• Bullish Scenario: A "beat and raise" (beating estimates and raising guidance) combined with positive commentary on China and AI could spark a reversal, pushing the stock back toward the $270-$288 range. Analysts at JP Morgan recently raised their target to $315, citing confidence in the multi-year product cycle.
• Bearish Scenario: If iPhone revenue misses the high expectations or if guidance for the March quarter is tepid due to rising component costs (specifically memory), the stock could break below crucial support levels near $206-$210.

Apple Daily Chart, January 28, 2025

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Source: TradingView

The Bottom Line

This earnings report is about more than just a holiday quarter beat; it is a litmus test for the iPhone 17's longevity and Apple's ability to maintain growth in the AI era. With the stock currently underperforming the broader tech sector in 2026, a strong report is needed to reignite investor momentum.

Follow Zain on Twitter/X for Additional Market News and Insights @zvawda

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