Apple Inc. (AAPL.US) financial report cooling down? Jefferies Financial Group Inc., Wedbush, and the market have expressed conflicting views.

Apple Inc. (AAPL.US) will announce its latest quarterly financial report after the US stock market closes on Thursday. Market expectations are that the company's Q3 sales will be $89.1 billion, a year-on-year increase of 3.9%; earnings per share will be $1.42, a year-on-year increase of only 1.4%. Despite concerns in the market about Apple Inc.'s profit growth slowing, Jefferies Financial Group Inc. and Wedbush still believe that the company will announce impressive performance. Jefferies Financial Group Inc. reiterated its "hold" rating for Apple Inc., with a target price of $188.32. Jefferies Financial Group Inc. analysts led by Edison Lee expect strong performance from Apple Inc. in the June quarter, citing strong demand for the iPhone and new data from US telecommunications companies confirming this trend. Data released last week by the three major US telecommunications companies showed a year-on-year increase in device sales of about 22%, a significant acceleration from the 6% in the first quarter of 2025, and hitting a new high in nearly six quarters. Lee stated, "Telecom operators attribute this strong performance to consumer demand driven by tariff policies. We believe this strong trend will benefit Apple Inc., Samsung, and Motorola the most, as these brands accounted for 91% of US smartphone sales in 2024." Jefferies Financial Group Inc. once again predicts an 8% year-on-year increase in iPhone shipments for the June quarter, higher than the 4% and 1.5% growth forecasted by Counterpoint and IDC. Jefferies Financial Group Inc. also mentioned that the price of the iPhone 17 from Apple Inc. may increase, although the increase is not enough to warrant a reevaluation of the stock. The Lee team predicts that the prices of iPhone 17 Slim/Pro/Pro Max will increase by $50 (the base model remains unchanged), representing a 4% to 5% increase from the previous year. Lee believes that the average bill of materials (BOM) cost for the iPhone 17 will increase by $20 to $25. The impact of tariffs has already been evident before the finalization of equal tariffs between the US and China and India. The analysts add that assuming 40% of the iPhone 17 series sold in the US is produced in China, current tariff rates would increase costs by 8%. The analysts also mention that even if Apple Inc. were to raise prices globally to offset the tariff impact, costs would still increase by 2.5%, or nearly $25. Therefore, the analysts point out that a $50 price increase (excluding the base model) may barely compensate for the cost increase mentioned above. The Lee team notes that supply chain surveys indicate that Apple Inc. plans to produce 18% of the iPhone 17 in India in the second half of 2025 (all four models), with this percentage rising to 25% in the first half of 2026 and to 30% to 35% in the second half of 2026. Long-term goals include producing 40% of iPhones in India to meet the demand from the US and India. The analysts also mention that the remaining 60% will continue to be produced in China to meet demand from countries outside the US and India. According to data from research firm Canalys, smartphone production in India has increased by 240% year-on-year, now accounting for 44% of smartphones imported into the US, compared to just 13% in the second quarter of 2024. However, Lee and the team point out that the defect rate for products made in China is 99%, while in India it is between 94% and 97%. This means that the cost of assembling an iPhone in India would be 2% to 5% higher than in China. In addition, there would be logistics costs (since most components are shipped from China to India), and production efficiency in India may be lower. These analysts estimate that there would need to be a tariff differential of at least 10 percentage points between China and the US for Apple Inc. to consider moving its factories to India. However, supply chain security and local content requirements in India may prompt Apple Inc. to take action, even if it may not be financially feasible. Wedbush maintains an "outperform" rating for Apple Inc., with a target price of $270, believing that the company will announce strong performance. Analysts led by Daniel Ives state that the market will be focused on whether Apple Inc. can deliver impressive financial results, with a slight rebound in iPhone sales in China being particularly crucial. Wedbush analysts say, "This financial report is just an appetizer before the release of the September iPhone 17, and what Cook says about the outlook for products and demand expectations during the conference call will be the market's focus." Ives and his team predict that with the release of the iPhone 17, accelerating sales growth for devices will be driven by the increasing replacement demand from existing users worldwide. They estimate that about 20% of the current 1.5 billion iPhones globally are over four years old and have not been upgraded. Ives' team states, "However, the biggest suspense currently is Apple Inc.'s artificial intelligence (AI) strategy layout. When the entire tech industry is focusing on the biggest technological revolution in 40 yearsthe commercialization wave of AI, Apple Inc. has yet to make substantial moves." It is estimated that a successful AI commercialization strategy could increase Apple Inc.'s valuation by $75 per share, and "Cook has little time left to make a breakthrough." The analysts caution that investors and developers are running out of patience, and Apple Inc. must make substantial breakthroughs in its AI strategy. Ives and his team emphasize, "Cook and the Apple Inc. management must face the new era of AI-driven technological revolution. If they continue to be stagnant, it may leave a significant strategic mistake on the pages of tech history." Data from TipRanks shows that overall, Wall Street analysts rate Apple Inc. as a "moderate buy," with an average target price of $228.11, 8% higher than the current stock price. As of Wednesday's US stock market close, Apple Inc. dropped by 1.05% to $209.05. The stock has fallen by 16% so far this year.