Apple (NASDAQ:AAPL) is gearing up to unveil its second-quarter fiscal 2024 results on May 2.

Estimates suggest a slight dip in revenue to $89.99 billion, marking a 5.11% decrease year over year, while earnings are expected to reach $1.51 per share, up by a penny from the previous month. Despite this, it’s a 0.66% drop from last year’s figures.

Over the past year, Apple has maintained a strong performance, consistently surpassing earnings expectations for the past four quarters by an average of 5.20%.

However, challenges such as declining iPhone demand, a sluggish Chinese market, intense competition, and regulatory hurdles have weighed on the company’s stock, which has dipped by 12.1% year to date, underperforming the broader  Computer & Technology sector.

iPhone Sales Projected to Slide in Q2

Apple’s fortunes heavily rely on iPhone sales, which contribute significantly to its revenue. In the previous quarter, iPhone sales comprised 58.3% of net sales, amounting to $69.7 billion, marking a 6% increase year over year.

For the current quarter, Apple expects iPhone revenues to mirror those of the previous year, excluding the additional $5 billion generated from pent-up demand for the iPhone 14 and iPhone 14 Pro Max.

Forecasts anticipate second-quarter iPhone net sales to reach $46.99 billion, indicating an 8.5% decline year over year, with approximately 53.3 million iPhones shipped.

According to Canalys’ latest report, Apple holds a 16% market share in global smartphone shipments for the first quarter of calendar 2024, trailing Samsung’s 20%. However, the integration of Gemini, Google’s generative AI service, into iOS could potentially boost iPhone shipments.

Steady Growth Expected in Services Segment

To offset the decline in iPhone sales, Apple relies on the steady growth of its Services segment. The increasing number of paid subscribers has been instrumental in driving Services revenue, fueled by the popularity of the App Store and the growing installed base of devices.

With over 1 billion paid subscribers across its Services portfolio, Apple continues to attract developers worldwide, offering new and exciting apps that drive traffic. Services such as Apple TV+, Apple Arcade, Apple News+, Apple Card, Apple Fitness+, and Apple One bundle are expected to contribute to overall growth.

Estimates suggest second-quarter Services net sales to reach $23.07 billion, indicating a 10.3% year-over-year increase.

Mac Sales Predicted to Decline

Despite witnessing growth in the PC segment in the first quarter of calendar 2024, with Lenovo leading the market share, followed by HP and Dell Technologies, Apple is likely to experience a decline in Mac sales for the current quarter.

Projections indicate second-quarter Mac net sales to reach $6.03 billion, marking a 15.9% year-over-year decline.

In Conclusion

Apple faces near-term challenges, including weak iPhone and Mac sales, as well as uncertainties in the Chinese market and regulatory pressures.

Despite these challenges, the current dip in Apple’s stock presents a potential buying opportunity. Key catalysts such as the integration of AI into iPhone, compelling Apple TV+ content, an expanding installed base, and a robust Services business could drive future growth.

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