Apple Q3 Earnings Today: Analysts Want AI Updates, With Stock Down 16%

Morgan Stanley analyst Erik Woodring doesn’t think AI is as crucial to Apple’s strategy as other analysts argue.

“We continue to believe that investors do not fully appreciate Apple’s AI intentions — most often comparing what Apple needs to do in AI with what META, GOOGL, AMZN, and others are doing,” Woodring said. “Of course, we acknowledge that Apple might not have fully finalized their own approach to AI, but we also believe that anyone thinking Apple will acquire an AI-powered search engine to ‘solve their AI shortfalls’ is misguided.”

He continued: “We recognize the uncertainty around AI means Apple is not near the top of the “AI Beneficiaries” pecking order today, but
Apple’s core business (selling products and services) is not materially threatened by AI in the near term, and as a result, Apple still has time to right the AI ship.”

Morgan Stanley still has an “Overweight” rating on the stock with a price target of $235.

Wedbush’s Dan Ives is another analyst who sees quick progress on AI as crucial for Apple. He said the firm is in danger of falling permanently behind in the AI race if it doesn’t change course soon.

“In the AI Revolution there is an arms race going on between Big Tech stalwarts Nvidia, Microsoft, Alphabet, Amazon, Meta, OpenAI, Oracle and many others to monetize the biggest tech trend in the last 50 years…..while Apple is at a highway rest stop on a bench watching this 4th Industrial Revolution race go by at 100 miles an hour,” Ives wrote earlier this month.

Ives said Apple should jump on the Perplexity deal and that if it acts quickly, the company can still catch up to competitors. He said such a move would be a “no-brainer” for Apple.

Wedbush has a $270 price target for Apple stock.

After setbacks and delays to its expected AI-driven Siri, Wall Street was eager to hear at WWDC 2025 about the company’s plans to stay competitive in the AI arms race.

While Apple did introduce some new Apple Intelligence features, like AI-powered personalized shortcuts on Mac, it also reiterated that it “needed more time to reach our high-quality bar” and more will be launched in the coming year.

The keynote mainly focused on “Liquid Glass,” a glass-like software design coming to Apple’s gadget lineup this fall.

Investors think Apple is behind on its AI efforts and will be watching to see if CEO Tim Cook signals any shifts in strategy.

Melius Research analyst Ben Reitzes said to listen for potential updates on the rumored possibility that Apple buys Perplexity AI to help with its upgrade of Siri.

Such a move could send the share price soaring, he said, as the company looks for ways to make its products’ interface smoother for users.

“It does feel like the market would reward Apple for being bolder, which could result in several hundreds of billions in value,” Reitzes wrote in a July 21 note.

Melius has a $240 price target on Apple stock.

President Donald Trump’s demand for American-made iPhones has become a tariff headache for Apple. To avoid hefty tariff costs from manufacturing in China, the tech giant is ramping up production in India to make more US iPhones outside the region it once heavily relied on.

Smartphones assembled in India made up 44% of US imports in Q2, a jump from the 13% during the same period in 2024, research firm Canalys estimated in an analysis published on Monday.

“For the June quarter, we do expect the majority of iPhones sold in the US will have India as their country of origin,” CEO Tim Cook said during the May 1 earnings call.

The iPhone maker is also looking for American options for its supply chain. On July 15, it announced a $500 million investment in MP Materials, a US producer of rare earth magnets. The deal was a part of Apple’s initiative to spend $500 billion in the US over the next four years.

In a note earlier this week, Bank of America said its clients would be most interested in Apple’s Q2 and future estimated profit margins for clues about how the company, with its sprawling global supply chains, will be able to navigate the trade war.

BofA analyst Wamsi Mohan says tariffs should have a “meaningful negative impact” on Apple’s profits.

One thing that could counteract a hit to margins, however, is the release of a slimmer iPhone, Mohan said. The company could announce the product, which they would likely sell for a higher price than previous iPhones, in September.

“We expect the slim iPhone to replace the Plus model from last year and be priced $100 higher vs the Plus model,” Mohan wrote.

BofA has a “Buy” rating on Apple stock, and expects it to climb to $235 a share within the next 12 months.

Third quarter

Revenue estimate $89.3 billion

EPS estimate $1.43Products revenue estimate $62.81 billionIPhone revenue estimate $40.06 billionMac revenue estimate $7.3 billionIPad revenue estimate $7.07 billionWearables, home and accessories estimate $7.78 billionServices revenue estimate $26.9 billionGreater China rev. estimate $15.19 billionTotal operating expenses estimate $15.34 billionGross margin estimate $41.16 billion

Fourth quarter

Capital expenditure estimate $3 billion

Full year

Capital expenditure estimate $11.28 billion

Source: Bloomberg data