Apple’s Q3 results are expected to be strong, with Wall Street-beating figures for the quarter according to analysts at Morgan Stanley.
Apple will be releasing its Q3 financial results on July 31, giving a look into how the company fared amid the tariff policy changes. If Morgan Stanley is right, Apple will do well in the face of the import troubles.
In a note to investors shared with AppleInsiderMorgan Stanley explains that it expects healthy upside across Apple’s various product categories, in part with an extra kick from exchange rates. When it comes to revenue, Apple could hit a 5.8% year-over-year improvement.
For iPhone, it has updated its estimate to above the consensus by 2%, thanks to a combination of shipment increases and higher average selling prices (ASPs). The same demand-based benefits are felt by iPad and Mac, at 9% and 1% improvement respectively.
Overall for the June quarter, revenue is anticipated to hit $90.7 billion.
The lack of Services guidance in the Q2 call with analysts was apparently an issue for investors, who read it along with the April 30th App Store injunction as potentially slowing down growth in the June quarter. Morgan Stanley says it doesn’t believe it to be the case, and has raised its forecast to 11.6% growth year-over-year.
For the App Store alone, Morgan Stanley also predicts 11.6% year-over-year growth. As for how much growth Services could make, the analysts feel it could be an eighth consecutive quarter at between 10% and 15%.
September and AI
Growth is expected to “trough” in the September quarter, the analysts believe, but it should still be positive. The forecast for that quarter is an improvement from an earlier prediction of $95.7 billion in revenue to $96.5 billion, and an EPS change from $1.56 to a new forecast of $1.61.
This is due to modest dollar tailwinds, upsides to Mac and iPad builds, and better Services revenue growth.
The gross margin forecast has been updated from 45.3% to 46.1%, with the inclusion of $1.5 billion in tariff costs.
When it comes to Apple’s artificial intelligence efforts, Morgan Stanley warns not to expect any meaningful updates to Apple Intelligence or Apple AI in the quarter.
Investors don’t appreciate Apple’s AI work, the analysts believe, in part because of the comparison with Google, Meta, and Amazon’s work.
While Morgan Stanley acknowledges Apple may not have fully finalized its AI approach, the analysts also feel that anyone thinking Apple will acquire an AI search engine is “misguided.” Apple doesn’t want to compete in search, regardless of the DOJ-Google fight.
Instead, it is thought Apple will create a platform for virtual assistant-like features. One combining homegrown LLMs based around Siri, and others using white-labeled tech from third-party firms.
Morgan Stanley adds it doesn’t expect any updates on Apple Intelligence timing beyond 2026, nor any update on progress in China.
Overall, Morgan Stanley rates Apple as “Overweight,” and maintains a price target of $235.
