Apple (NASDAQ:AAPL) is set to release its fourth-quarter fiscal 2025 earnings on October 30, with investors closely monitoring the company’s iPhone, Mac, and Services performance. While Apple shares have underperformed the broader tech sector this year, the company’s strong product lineup and AI initiatives could provide upside potential for Apple stock.

iPhone Sales Remain Critical

The iPhone remains Apple’s biggest revenue driver, accounting for nearly 47.4% of net sales in Q3 2025. Sales of the iPhone grew 13.5% year-over-year to $44.58 billion. For Q4, analysts expect iPhone revenue of $49.75 billion, a 7.6% increase from the prior year.

Despite this growth, Apple faces stiff competition in China from Huawei, Xiaomi, Vivo, and OPPO. Shipments in China rose only 1% year-over-year, aided by iPhone 16 price discounts. Apple holds roughly 15% market share in the region, trailing major Chinese competitors. Nevertheless, strong iPhone adoption globally remains a critical pillar for Apple stock.

Services Segment Driving Double-Digit Growth

Apple’s Services business continues to expand, fueled by an installed base exceeding one billion devices. Paid subscribers across Apple TV+, Apple Arcade, Apple News+, Apple Card, Apple Fitness+, and Apple One bundles have helped revenue rise consistently. For Q4, Services revenues are projected at $26.96 billion, a 12.3% increase year-over-year. This growth not only adds recurring revenue but also strengthens margins, supporting Apple stock performance.

Mac Growth Supported by M4 Chips

Apple’s Mac lineup also shows promise. Revenue for Q4 is projected at $8.44 billion, a 9% increase year-over-year, driven by demand for M4-powered devices including the 14-inch MacBook Pro and iPad Pro. According to IDC and Gartner, Apple’s PC market share has grown modestly, reaching around 9%. While Lenovo (OTC:LNVGY), Dell Technologies (NASDAQ:DELL), and HP (NYSE:HPQ) remain competitors, Apple’s integration of hardware and software gives it a competitive edge that could benefit Apple stock long-term.

AI Initiatives Bolster Outlook

Apple is investing heavily in artificial intelligence, which is expected to improve iPhone performance and support new consumer devices like Apple Vision Pro. AI-enabled Macs and iPads could drive incremental sales and enhance the company’s ecosystem. Early adoption of AI across iPhone 17, new iPads, and MacBooks may increase customer engagement, contributing positively to Apple stock momentum.

Valuation and Risks

Despite growth prospects, Apple shares have risen only 5% year-to-date, underperforming the broader Zacks Computer & Technology sector, which has gained 26%. Forward P/E for AAPL stands at 33.22X, above the sector’s 29.64X, signaling stretched valuation. Regulatory challenges, competition in smartphones and PCs, and high expectations for AI integration pose risks for investors.

Consensus Expectations

Analysts expect Apple to report earnings per share (EPS) of $1.73, up 5.5% from last year. The company has beaten EPS estimates in the last four quarters, averaging a 6.2% surprise. Strong iPhone sales, growing Services revenue, and robust Mac demand are likely to sustain profitability, supporting Apple stock despite short-term challenges.

Bottom Line

Apple stock may see gains if its Q4 results meet or exceed expectations, particularly in iPhone, Mac, and Services segments. AI initiatives and new device launches provide additional upside potential. However, stretched valuation and competitive pressures make careful monitoring essential for investors. Apple stock remains a compelling long-term play, but with near-term risks tied to competition, regulatory headwinds, and market expectations.

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