Strong services expected to offset weak iPhone sales for AAPL's Q1 earnings

From Nasdaq: 2025-01-29 12:19:00

Apple is set to report its first-quarter fiscal 2025 results on Jan. 30, with expectations of stiff competition for iPhone in China. However, the Services business is anticipated to show strong growth to offset this challenge. iPhone sales may have been impacted by competition from Chinese vendors like Huawei and Xiaomi, along with a delay in the launch of Apple Intelligence in China.

The Services segment has become a significant revenue driver for Apple, with double-digit growth rates expected similar to fiscal 2024. The Zacks Consensus Estimate for fiscal first-quarter iPhone net sales is $69.189 billion, indicating a 0.7% decline year-over-year. Meanwhile, Services are estimated to reach $26.176 billion, reflecting a 13.2% increase year-over-year.

Apple’s Services business is poised for growth due to the increasing user base of the App Store, Apple Pay, Apple Arcade, and Apple TV+. The company had over 1 billion paid subscribers across its Services portfolio at the end of the fiscal fourth quarter, with double-digit growth in paid subscriptions expected to continue in the upcoming quarter.

In the PC segment, Apple’s Mac shipments increased 17.3% year over year, making it the best-performing vendor according to IDC. Gartner estimates a 4.6% increase in Mac shipments. The Zacks Consensus Estimate for fiscal first-quarter Mac net sales is $8.326 billion, signaling a 7% growth year-over-year.

iPad sales for Apple saw a 7.9% year-over-year increase in the fiscal fourth quarter, driven by strong demand for iPad Pro and the new iPad Air models. The momentum is expected to continue into the first quarter of fiscal 2025, with the Zacks Consensus Estimate for iPad net sales at $7.387 billion, projecting a 5.2% growth year-over-year.



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