Increased popularity of the iPhone 17 Pro models will more than cover the slight drop in Services growth according to Evercore, ahead of the Q1 AAPL results.
Apple's first-quarter results are usually the highest of the fiscal year, and analysts are jointly forecasting it will be a bumper year for the company in 2026. In its own pre-results note, Evercore joins the chorus on sky-high revenues.
In figures shared with AppleInsider, Evercore believes there to be near-term upside compared to Wall Street consensus estimates. It models Apple's Q1 results at $140.5 billion in revenue and an earnings per share of $2.71.
By comparison, its consensus result is lower at $137.5 billion and $2.67, respectively.
Breaking down the figures, iPhone demand is high and skewed towards the higher-specification and more expensive models than usual. This increases the average selling price, apparently beyond what Wall Street believes them to be in Evercore's estimates.
That results in Evercore projecting iPhone revenues to be up 17% year-over-year from Q1 2025, higher than the 11% increase from consensus speculation. This is also in line with Apple's guidance on the quarter, which expected double-digit iPhone revenue improvements.
Aside from strong iPhone demand, Evercore touches upon the ongoing memory cost headwind problem. This will be minimal for Apple in Q1 and Q2, thanks to the use of long-term agreements with suppliers keeping prices low while maintaining its supply.
Services up but App Store down
When it comes to other areas of the balance sheet, Evercore still believes Apple's Services revenue will go up for the quarter by 13% year-over-year. For reference, Q1 2025's Services revenue grew 13.9%.
The figure could've been higher, if it wasn't for slight failings in the App Store.
The note says the App Store had "softer" data points, caused by weaker gaming revenue in Asia and tougher year-over-year performance comparisons. With estimates that the App Store makes up about 20% of Services revenue, App Store wobbles can certainly influence the arm's bottom line.
That said, Services revenue still grew 4% higher than the App Store performed, in Evercore's estimation.
The strong iPhone product cycle apparently was a help here, due to driving sales of connected services. Warranty sales of Apple Care and Apple One subscriptions helped buoy the continually-positive growth rate for one more quarter.
Evercore currently rates Apple with a price target of $330 as of January 9, with an "Outperform" designation.
We won't have long to wait to see if Evercore got its figures right. Apple will be releasing its Q1 2026 results on January 29, and AppleInsider will be reporting the numbers as they arrive.
