John Ternus, who took over leadership at Apple in September, will hold his first earnings call as CEO on Monday. Investors will closely monitor the company's forecasts to determine if the release of a large number of new products can offset rising memory chip costs.
Under Ternus's leadership, Apple introduced its first foldable phone, a smart home hub, and its first touchscreen laptops. All these products began shipping in the first quarter of the current fiscal year, against the backdrop of Tim Cook previously calling rising memory costs a '100-year flood.'
Apple will face intense scrutiny on three main issues: its key expectations for the December holiday quarter, Ternus's comments regarding artificial intelligence (AI) and the updated Siri, and the increasing costs of memory chips, which analysts believe could slow quarterly profit growth to its lowest in six quarters.
Apple is attempting to position its AI offerings differently from competitors, such as Meta Platforms' Muse agent, which recently gained high rankings in the App Store. Other rivals, like OpenAI, against whom Apple is suing for trade secret theft, are also developing devices intended to replace the iPhone as people's primary gadget. How Apple integrates AI could have serious implications for the future of its services business, whose slowing growth has worried investors after many years of rapid development.
Dan Morgan, portfolio manager at Synovus Trust, which holds Apple stock, noted: 'Recent innovations in agents significantly outpace our experience with Siri AI, but Apple has acknowledged that Siri AI... is much more focused on trust/privacy.'
Apple is promoting its AI systems among 'ordinary people,' rather than among Silicon Valley specialists who actively use advanced AI models from companies like OpenAI.
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Morgan added that investors want to know whether Apple can profit from distributing third-party AI agents through its App Store and taking a commission from the generated business. So far, Apple's reluctance to participate in the massive AI race has benefited it: its shares have risen by approximately 27% this year, outpacing tech giants such as Microsoft, Alphabet, Meta, and Amazon, as investors seek refuge from growing concerns about the cost of building AI infrastructure.
According to London Stock Exchange Group data, analysts expect Apple's revenue from July to September, the fourth quarter of the fiscal year, to reach nearly 11% growth, totaling $113.39 billion. Net income is expected to increase by approximately 6%, reaching $29.04 billion.
Apple's services business is projected to grow by almost 10%, reaching $31.56 billion, which is the slowest growth rate in over three years. iPhone sales are forecast to increase by approximately 15%, reaching $56.54 billion, a slowdown compared to the roughly 22% growth of the previous three months. These figures cover only nine days of sales of the new iPhone 18 Pro models. The iPhone Duo, the company's first foldable product, was released on October 23 and will contribute to the holiday quarter results.
Comments on Duo sales will be closely examined after some buyers of the device, which starts at $1,999 and R 47,999 South African rand, reported cracks and lines along the central crease of the inner display, prompting Apple to offer replacements. Online orders for Duo sold out within minutes.
Nabila Popal, an analyst at IDC research firm, believes that demand for Duo will continue to exceed supply despite screen issues. She noted that the test will be the speed at which Apple can replace damaged devices while maintaining limited supplies. Bank of America estimates that Duo buyers face an average delivery wait time of 79 days, with shipments potentially stretching into January.
