Financial Report Preview | iPhone 16 not selling well? Apple Q4 still expected to achieve double profit growth

According to the Zhitong Finance and Economics APP, tech giant Apple (AAPL.US) will announce its fourth-quarter fiscal year 2024 earnings after the US stock market closes on October 31 (Thursday). The market expects the company's Q4 revenue to be $94.32 billion, a year-on-year increase of 5.38%; earnings per share to be $1.53, a year-on-year increase of 4.85%. The market also anticipates Apple's Q4 net profit to reach $24.239 billion, and EBITDA to reach $32.851 billion. These figures have been slightly adjusted from earlier forecasts. Analysts will closely monitor the growth of iPhone sales, expected to increase by 2.5%, as the response to the iPhone 16 has been lower than expected. This moderate growth indicates a slowdown in the consumer upgrade cycle. Apple's services business continues to show promising prospects, expected to achieve double-digit expansion, which will help the company maintain a healthy operating profit margin. Focus on the Chinese Market and Market Challenges Apple's performance in the Chinese market remains a focus of investor attention. Recent third-party data from the region has shown mixed results, bringing uncertainty to Apple's future growth prospects. Comments from Apple's management on the Chinese market are crucial for understanding the company's outlook in this key region. Any signs of weakening demand could affect investor sentiment. Reports indicate a reduction of 10 million units in the production plan for the iPhone 16, raising concerns about overall demand. This adjustment may put pressure on the company's forward guidance. The performance of Apple's stock reflects these uncertainties, with the stock rising 20% year-to-date, still lagging behind the S&P 500 index's 22% increase. Focus on Innovation and Artificial Intelligence Apple continues to enhance its artificial intelligence (AI) capabilities by integrating Apple Intelligence features into its product lineup. This strategic focus demonstrates the company's commitment to innovation. Despite these advancements, research and development expenses are expected to increase only slightly. The company appears to be taking a cautious approach to AI investments. Supported by the growth of high-margin services business, this balanced strategy will help improve the operating profit margin. The services business is becoming increasingly important for Apple's financial performance. Despite ongoing cautious market reactions, hardware innovation and service growth provide Apple with multiple sources of revenue. Capital Returns and Shareholder Value The market expects Apple to maintain a strong capital return plan, with an expected $25 billion stock repurchase in the fourth quarter. This is consistent with recent quarterly average levels. The company's ample cash reserves and strong cash flow generation continue to support these shareholder-friendly policies. This financial strength remains a key factor in attracting investors. Overall, Wall Street analysts have given Apple a "moderate buy" rating with an average target price of $246.73, representing a 6.6% increase from the current level.