Goldman Sachs Group Inc (NYSE:GS, ETR:GOS) is upbeat on Apple Inc (NASDAQ:AAPL, ETR:APC) this week ahead of the iPhone maker's fiscal third quarter report, expecting it to deliver revenue and earnings above Wall Street estimates.
“We expect Apple’s fiscal Q3 2025 earnings to deliver a revenue beat, $89.5 billion versus the FactSet consensus $89.1 billion, with EPS of $1.45, versus the consensus $1.42,” the analysts wrote, citing strong performance across both Services and Products segments, as well as better-than-expected gross margins.
They added that the company should report gross margins of 46.5% versus the consensus 45.9%, near the midpoint of guidance for 45.5% to 46.5%, including $900 million in tariff-related costs.
The primary driver of the beat is expected to be double-digit Services growth.
“Services revenue should grow 11% year-over-year to $26.9 billion versus the consensus of $26.8 billion, driven by 12% year-over-year growth in App Store billings,” Goldman Sachs wrote.
The analysts highlighted the resilience of this segment despite regulatory challenges, writing “Services revenue growth should be resilient, supported by continued acceleration of App Store spending growth despite heightened App Store uncertainty due to the availability of off-platform payment options.”
On the Products side, the analysts see strength across iPhones, Mac, iPad and Wearables.
They expect iPhone revenue of $39.8 billion, largely in line with the consensus of $40 billion, based on 2% year-over-year unit growth and a 1% drop in average selling price (ASP).
For 2025, they expect iPhone revenue growth of 1% year-over-year and are encouraged by the upcoming release of the iPhone 17 in September 2025, which is expected to feature a new ‘thin’ form factor that should generate upgrade demand amidst Apple’s aging installed base of devices purchased in 2020 to 2021.
“iPhone upgrade demand should be supported by heightened US wireless carrier promotional activity and new product innovation including Apple Intelligence and form factor changes (e.g., iPhone 17 Air, iPhone 18 foldable),” they wrote.
Mac revenue is expected to be $7.4 billion, up 5% year-over-year, driven by a 21% year-over-year increase in units and a 13% decline in ASP.
iPad revenue is expected to grow 3% from the year-ago quarter to $7.4 billion, driven by a 3% decline in unit volume and 6% increase in ASP.
Goldman Sachs also expects a strong start to Apple’s fiscal fourth quarter, with EPS of $1.70 and revenue of $99.5 billion, both ahead of consensus.
“We expect Apple to guide to fiscal Q4 2025 revenue growth of low single digits to mid single digits year-over-year,” the analysts wrote.
The analysts maintain a ‘Buy’ rating on the iPhone maker but slightly lowered their price target to $251 from $253. Shares traded hands at $215 on Monday afternoon, down 14% in the year to date.
Apple will report its Q3 results after US markets close on July 31.