Apple Inc is gearing up for its Fiscal Q3 2024 earnings report on Thursday, August 1, 2024 at 2:00 p.m. PT / 5:00 p.m. ET. According to JPMorgan analyst Samik Chatterjee, Apple is not just coasting on its past success but gearing up for a thrilling AI-driven future that could propel its stock to new heights.

Chatterjee has placed Apple on a ‘Positive Catalyst Watch,’ raising the price target to $265 by December 2025, up from the previous $245 for December 2024.

So, what's behind this optimistic outlook? Let's dive into the details.

AI is Apple’s Next Ace

According to Chatterjee, Apple is in a strong position to leverage this upcoming AI cycle, particularly through its iPhone and overall revenue performance.

"We expect Apple to reassure investors that the upcoming AI replacement cycle earmarked to begin in earnest in FY25 (Sep-end), and step-up further into FY26, is leveraging a more robust launchpad in FY24 with better than expected revenue drivers," says Chatterjee.

He expects a revenue beat for both iPhone sales and the company’s total revenue, which could ease investor concerns about Apple’s premium valuation multiple. For the third quarter, Chatterjee anticipates Apple’s revenue to reach $85.3 billion, slightly above the consensus of $84.3 billion. Earnings per share are expected to be $1.38, compared to the consensus of $1.34.

iPhone To Be Key Apple Earnings’ Driver

Notably, the iPhone is projected to be a key driver of this performance, with estimated sales of approximately 44 million units, leading to $39.9 billion in revenue, surpassing the consensus of $38.9 billion. Strong performance in China and other key regions is expected to contribute significantly to these numbers.

Looking ahead to the fourth quarter, Chatterjee forecasts revenue of $95.5 billion and earnings per share of $1.62, both ahead of the consensus estimates. This projection marks the second consecutive quarter of year-over-year revenue growth, following a decline earlier this year.

The iPhone, Services, and Mac segments are expected to lead the charge, while the Wearables, Home, and Accessories segment might experience some decline. For more on this, read the full report by Business Insider.