Goldman Sachs said the firm expects Apple (NASDAQ:AAPL) to deliver an EPS beat when its reports earnings for its latest quarter on August 3.
Analysts told investors in a note they see Apple posting EPS of $1.21, beating the consensus of $1.19, driven by outperformance in Mac and Services.
"Our Mac revenue of $9.4 bn (v. $9.3 bn prior) is mostly unchanged and exceeds FactSet consensus Mac revenue of $6.3 bn (-15% you) reflecting easy comps from year-ago supply chain issues and is supported by latest industry research estimates (e.g., IDC estimates Mac units +10% yoy)," the analysts wrote.
"We forecast Services revenue of $21.8 bn (+11% yoy), ahead of consensus of $20.7 bn (+6% yoy) that is largely consistent with company guidance of growth similar to F2Q23 (+5% yoy)."
Analysts explained that the upside to its Services forecast reflects the inflection in App Store spending, per Sensor Tower data, strong growth in advertising, continued content investments in AppleTV, and a "more benign forex headwind" compared to company guidance of -400 bps.
They continued, stating that while they recognize investor concerns around valuation and downside risks, they continue to believe that Apple's growing iPhone installed base serves as the foundation for growing monetization per user.
"Accordingly, we view AAPL as a long-term earnings & free cash flow compounder with strong visibility into that growth that supports a premium valuation," analysts concluded.