Apple earnings preview: Demand for new iPhones improves, but HSBC expects quarterly growth to slow
HSBC expects Apple’s revenue for the quarter ended September 2026 to rise 10.6% year on year, slowing from the previous quarter. Early sales of the iPhone 18 Pro and preorders for the foldable Duo have been positive, but the Duo’s inner-screen issues and chip costs warrant attention.
Original source：HSBC Continental EuropeFirst published on Unhidea：Original source date：
Key takeaway
HSBC believes new products and AI features could drive an Apple upgrade cycle, but its near-term earnings expectations are broadly in line with company guidance, while the Duo’s screen issues and memory costs are significant constraints.
What are the key earnings expectations?
Apple will report results for the fourth quarter of fiscal 2026, ended September, after the US market closes on 2 November. HSBC expects revenue of 113.283 billion dollars, up 10.6% year on year, below the 16.4% growth recorded in the third fiscal quarter; the Visible Alpha market consensus is for growth of 10.9%.
Both forecasts fall within Apple’s revenue growth guidance of 9%–11%. HSBC expects earnings per share of 2.01 dollars, slightly above the market consensus of 2.00 dollars; it forecasts a gross margin of 47.7%, compared with company guidance of 47%–48%.
Which businesses are supporting growth, and which are weaker?
HSBC expects fourth-quarter iPhone revenue of 56.51 billion dollars, up 15.3% year on year and slightly above the market consensus of 15.0%, making it the main support for growth in the product business.
Services revenue is expected to reach 31.625 billion dollars, up 10.0% year on year and close to the market consensus of 10.3%. Apple previously said services growth would be similar to the third fiscal quarter’s 12% after adjusting for currency effects; the company expects currencies to create a headwind of approximately 2.5 percentage points.
The iPad is a weaker area in HSBC’s forecast: it expects revenue of 6.319 billion dollars, down 9.1% year on year, while the market consensus forecasts a decline of 0.2%. HSBC is relatively optimistic about wearables, forecasting revenue growth of 3.3% year on year, versus a consensus decline of 0.1%.
How strong is early demand for the new iPhones?
According to Counterpoint data, sales of the iPhone 18 Pro series in its first three weeks were 3.1% higher than those of the 17 Pro series; the new series went on sale on 18 September. In China, sales in the first three days rose 12% year on year.
The iPhone Duo, Apple’s first foldable phone, began global sales on 23 October, with sales starting in a second group of markets on 30 October. Citing media reports, HSBC said preorders were strong, Apple raised its shipment target by 44%, and asked its supply chain to increase annual production from 9.7 million units to 14 million units.
Apple said the Duo had received very positive feedback, while acknowledging inner-screen issues in a small number of devices. HSBC hopes the company will provide further details on the earnings call.
Why is HSBC maintaining its buy rating?
HSBC believes the rollout of AI features and a strong product lineup could drive a major upgrade cycle. It therefore maintains its buy rating and target price of 366 dollars, implying potential upside of 6.4% from the 26 October closing price of 343.91 dollars.
The target price is based on forecast non-GAAP earnings per share of 11.22 dollars for fiscal 2027, a target price-to-earnings multiple of 33.5 times, and a regulatory risk discount of 2.5%.
Costs and competition could affect this assessment: HSBC notes that memory chip prices are rising, and a global shortage lasting longer than expected could affect gross margins; regulatory or legal action could also change the profitability of the services business.
