Apple used the holiday quarter to clearly move ahead despite somewhat weaker growth in its services sector. The decisive factor was the iPhone 17 Pro, which met expectations and sustained the company's operating results. Analysts therefore see a good chance that Apple will again exceed market expectations in the first quarter.
The first quarter is traditionally Apple's strongest of the entire fiscal year. Accordingly, analysts are closely watching early indicators. The research firm Evercore has already positioned itself and expects very high revenues. The tone for the full year 2026 is also decidedly optimistic. Even before Apple releases its official figures, Evercore anticipates that strong demand for the new iPhone models will more than compensate for a slight decline in the services business.
Stronger than Wall Street expected
According to Evercore, there is short-term upside potential compared to current Wall Street consensus estimates. Specifically, Evercore expects revenue of $140.5 billion and earnings per share of $2.71 for the first quarter.
- For comparison, consensus estimates are $137.5 billion in revenue and $2.67 in earnings per share. Evercore is thus clearly positioned above market expectations.
Demand is shifting towards more expensive iPhones
A key aspect of the analysis is the structure of iPhone demand. This demand is not only high overall, but also more concentrated than in previous cycles on models with better specifications and higher prices. The iPhone 17 Pro, in particular, is driving up the average selling price.
According to Evercore, this effect is more pronounced than Wall Street has previously factored into its models. Accordingly, the research firm expects iPhone revenues to increase by 17 million dollars in the first quarter of 2025 compared to the previous year. The consensus forecast anticipates an increase of only 11 million dollars. This assessment aligns with Apple's own forecast, which projects double-digit revenue growth for iPhones in the quarter.
High storage costs remain manageable for now
In addition to demand, Evercore also addresses the continued high cost of memory components. This issue has been a concern for Apple for some time. However, analysts expect little negative impact for the first and second quarters. This is due to long-term contracts with suppliers that guarantee both stable prices and a secure supply. As a result, margins are unlikely to be under much pressure in the short term.
Services continue to grow, App Store weaker
Evercore continues to expect solid growth in the services sector. Service revenues are projected to increase by 13 million % year-over-year for the quarter. By comparison, growth in the first quarter of 2025 was 13.9 million %.
Stronger growth was hampered by slight weaknesses in the App Store. Evercore's statement refers to "weaker data points," citing lower game revenues in Asia and more difficult year-on-year comparisons as reasons. Since the App Store accounts for an estimated 20% of total service revenue, such fluctuations can have a noticeable impact on the overall result.
Nevertheless, the service business as a whole performed better than the App Store alone. According to estimates by Evercore, service revenues grew approximately 4.1 TP5T faster than the App Store.
iPhone cycle supports service revenues
The strong iPhone product cycle also had a positive impact on related services. Sales of AppleCare warranties and Apple One subscriptions picked up, helping to maintain the overall positive growth rate in the services segment for another quarter.
The market is waiting for Apple's figures for the first quarter of 2026
Evercore currently rates Apple with a price target of $330 and an "Outperform" rating. Whether these optimistic assumptions prove correct will soon become clear. Apple will release its results for the first quarter of 2026 on January 29th. At that point, it will be clear whether the iPhone 17 Pro was indeed strong enough to significantly exceed expectations. The best products for you: Our Amazon storefront offers a wide selection of accessories, including those for HomeKit. (Image: Shutterstock / Savvapanf Photo)
Disclaimer: No recommendation for investments
This article does not constitute financial or investment advice. The information contained herein is for journalistic and informational purposes only. Please conduct your own research or consult a financial advisor before making any investment decisions.
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