On Tuesday afternoon, Apple (AAPL) is set to report earnings for its first fiscal 2020 quarter. Despite a sudden stock market tumble this week triggered by fears of a new type of coronavirus that rapidly spread across China, Wall Street analysts have high hopes for the tech giant to continue its stock rally and perhaps even to reverse the market tide.
Apple is expected to report a revenue of $88.1 billion, representing a 5% jump from a year ago, and a profit of $20.1 billion for the holiday quarter, according to an analyst poll by Visible Alpha cited by The Financial Times.
In August 2018, Apple’s market worth crossed $1 trillion for the first time. And after successfully weathering a brutal U.S.-China trade war and doubts over the appeal of iPhones, Apple is now valued at $1.4 trillion. But certain bullish analysts believe the iPhone maker still has room to go up—if things keep going well for just two more years.
“We believe by the end of 2021 Apple has potential to be the first $2 trillion valuation given the 5G tailwinds and services momentum potential over the coming years,” Wedbush analyst Dan Ives predicted. Wedbush has a price target of $400 for Apple shares, which are currently trading at $309.
In Tuesday’s earnings report, investors will closely watch figures on the iPhone, still Apple’s largest revenue source, wearables—particularly the Apple Watch and the unexpectedly popular AirPods and AirPods Pro—as well as the tech giant’s nascent service category, including iCloud and Apple TV+.
The greater China market (mainland China, Hong Kong and Taiwan), Apple’s third largest after the U.S. and Europe, will be under the spotlight, too, as political and economic uncertainties in the area remain a major risk factor for Apple’s bottom line.
Analysts expect sales in greater China to rise 11% from a year ago to reach $14.7 billion for the holiday quarter.
“Apple is a class of one,” DA Davidson analyst Tom Forte said of Apple CEO Tim Cook’s “diplomatic skill” in an interview with The Financial Times. “It’s the only company that can lobby both the U.S. government and the Chinese government. It’s almost too big to fail for both countries.”