Goldman Sachs Predicts 4% Revenue Growth for Apple's Q3

Goldman Sachs has issued a research report ahead of Apple's earnings, assigning a "buy" rating to the tech giant with a target price of $251. The report anticipates that Apple's third-quarter revenue and earnings per share (EPS) for the fiscal year 2025 will surpass market expectations. Apple is scheduled to release its third-quarter financial results on July 31.

The investment bank forecasts that Apple's third-quarter revenue will reach $89.5 billion, marking a 4% year-over-year increase, which exceeds the market's anticipated $89.1 billion. Additionally, the EPS is projected to be $1.45, surpassing the market's expectation of $1.42.

Several factors are expected to drive Apple's revenue and EPS above market forecasts. These include a double-digit growth in service revenue, with an 11% year-over-year increase, and strong performance across product lines such as iPhone, Mac, iPad, and wearable devices. Furthermore, the company's gross margin is anticipated to improve beyond expectations, benefiting from cost optimizations related to tariffs and a reduction in adverse currency exchange impacts.

Goldman Sachs highlights that Apple's service revenue growth is expected to remain resilient, primarily due to the accelerating growth in App Store consumption. Despite the introduction of third-party payment channels, which adds uncertainty to the platform, the firm remains optimistic. Over the next 12 months, iPhone upgrade demand is expected to be supported by two key factors: increased promotional efforts by U.S. wireless carriers and product innovations, including new smart features and design changes.

However, the report also notes potential downside risks, such as uncertainties surrounding trade policies and tariffs, as well as risks associated with Apple's advertising revenue. These factors could pose challenges in the short term.

Looking ahead to the fourth quarter of the fiscal year 2025, Goldman Sachs projects that Apple's revenue will reach $99.5 billion, with an EPS of $1.70 and a gross margin of 45.9%. These figures are all expected to outperform market consensus. With continued innovation in iPhone design and software, Apple is poised to experience an upgrade cycle for the iPhone in both the 2025 and 2026 fiscal years.