Apple's Earnings Report: A Closer Look at the Stock's Fair Value

Apple is set to release its Q3 earnings report on July 30. Morningstar's fair value estimate for Apple is $200 per share, and the stock is fairly valued according to the firm's rating. The key metrics to watch for include iPhone revenue, which is expected to slow down, services growth, and Apple's economic moat, which is wide due to customer switching costs, intangible assets, and a network effect.

Apple Inc. (NASDAQ:AAPL) is set to release its fiscal Q3 2025 earnings report on July 30. According to Morningstar, the stock is fairly valued at a fair value estimate of $200 per share. Investors and financial professionals should focus on several key metrics to gauge Apple's performance and future prospects.

Key Metrics to Watch

1. iPhone Revenue:
Apple's iPhone revenue is expected to slow down in the upcoming quarter. The company has traditionally seen weaker sales in the period leading up to major product launches, such as the iPhone 17, scheduled for September. However, Apple may see some offsetting gains from the launch of the budget-friendly iPhone 16e and refreshed M4-powered MacBooks [1].

2. Services Growth:
Apple's services segment, which includes the App Store, iCloud, Apple Music, and Apple TV+, is a significant driver of revenue growth. This segment is expected to continue growing, contributing to Apple's overall revenue. Analysts forecast a 12% year-over-year increase in services revenue, driven by strong performance in the App Store and other services [2].

3. Economic Moat:
Apple's economic moat, which encompasses customer switching costs, intangible assets, and network effects, remains wide. This moat protects Apple's long-term profitability and competitive position. However, the company faces ongoing legal challenges, such as the Epic case and Google antitrust trial, which could impact its services business [2].

Other Considerations

- Tariffs: Apple could incur additional costs due to tariffs, particularly from the United States and China. CEO Tim Cook warned that Apple could incur up to $900 million in additional costs during the June quarter due to tariffs [1].
- App Store Adjustments: Apple is expected to secure the European Union's antitrust regulators' approval for its proposed changes to the App Store's policies and pricing structure. This development aims to prevent the imposition of daily fines and may benefit Apple's services segment [2].

Conclusion

As Apple prepares to release its Q3 earnings report, investors should closely monitor iPhone revenue, services growth, and the company's economic moat. Additionally, tariffs and App Store adjustments are key considerations that could impact Apple's financial performance. Understanding these metrics and their historical performance can help investors make informed decisions about Apple's stock.

References

[1] https://www.trefis.com/stock/aapl/articles/569651/how-to-trade-apple-stock-ahead-of-q3-earnings/2025-07-21
[2] https://www.gurufocus.com/news/2994661/apple-aapl-expected-to-gain-eu-approval-on-app-store-adjustments-aapl-stock-news