Why Apple's Next Quarter Could Be a "Prove It" iPhone 17 Moment

Key Points

• Apple beat expectations on the top and bottom lines with its Q4 fiscal year 2025 results.
• The company also indicated that the next quarter will bring its strongest growth in years.
• Despite this, shares got no love from markets, which significantly raises the importance of the company's next earnings release as markets look to gauge iPhone 17 demand.

Over recent years, tech giant Apple NASDAQ: AAPL has lost its distinction as the most-watched stock in the market. The company’s sluggish product sales growth has led to it becoming a less discussed name among the Magnificent Seven. Exacerbating this is the firm’s lack of an exciting artificial intelligence (AI) strategy. Still, Apple remains one of the world’s most important companies. The company's market cap of just under $4 trillion makes it the world’s second most valuable stock, only behind NVIDIA NASDAQ: NVDA.

However, the release of the company’s iPhone 17 lineup has created renewed interest in Apple. Early demand data on these devices has been strong, leading to hopes that they could reinvigorate product sales. iPhone 17 excitement has helped lead Apple to new all-time highs in October. Importantly, Apple just reported its latest earnings. Below, we’ll dive into these results and management commentary to gain an updated outlook on the stock. Ultimately, how much potential resides in Apple shares over the short and long term?

Apple Posts Strong Beats Despite Constrained iPhone Supply

Apple reported its Q4 fiscal year 2025 (FY2025) results on Oct. 30. Investors should note that Apple’s fiscal year is one quarter ahead of the 2025 calendar year. The company’s financials were solid. Revenue grew by 8% to approximately $102.5 billion. This beat expectations by more than $800 million. Adjusted earnings per share (EPS) also came in strong at $1.85, beating estimates by 11 cents. This equated to an adjusted EPS growth rate of just under 13%.

Apple’s services segment continued to be a key growth driver. Revenues rose by 15%, which was the company’s fastest services growth rate since Q4 FY2023. Notably, the company’s overall sales beat came even though iPhone revenues underperformed. Its $49 billion in iPhone sales was around $1.1 billion less than the $50.1 billion Wall Street anticipated.

Despite this disappointment, the reason behind it was a somewhat positive one. Apple said that it faced “supply constraints” on several of its iPhone 16 and iPhone 17 models because demand was so strong. This limited the company’s ability to get these products to customers, reducing revenue recognition. However, the key takeaway is that demand was strong, meaning the revenue growth should soon follow.

In accordance, Apple is projecting double-digit iPhone sales growth next quarter. Outside of Q2 FY2025, the firm has not achieved this in four years. The company also expects total revenue to grow by 11% at the midpoint next quarter. If achieved, this would be the firm’s fastest total revenue growth rate since Q1 FY2021. Note that when Apple refers to next quarter being its “best ever," it is talking about absolute revenues, not revenue growth. Overall, Apple’s results were promising, setting the stage for a potentially very strong FY2026.

Updated Forecasts Project 10% Upside Potential in AAPL Shares

Generally speaking, Wall Street analysts were very impressed by Apple’s results. The MarketBeat consensus price target on Apple sits at around $277.50. This figure implies almost insignificant upside potential of 3%.

However, price targets issued or updated after the company’s Q4 FY2025 earnings release are much more bullish. Among them, the average target is around $297.30. This number implies solid upside in shares of approximately 10.5%.

Furthermore, among analysts for whom MarketBeat previously had price target data, the average target rose by nearly 14%. This shows the considerable positive impact Apple’s results had on analyst forecasts.

Meanwhile, Apple shares are actually down almost 1% since the company released these results. This divergence indicates a potential opportunity in Apple stock.

Apple Is Set Up for a Consequential Start to 2026

The lack of a positive move in Apple shares despite strong guidance suggests that the market has already baked in high iPhone 17 expectations. With a forward-price to earnings (P/E) ratio of 33x, the stock is trading only moderately below its three-year peak of 35x. Ultimately, Apple’s Q1 FY2026 may be a “prove it” quarter. The iPhone 17 lineup didn’t become available until Sept. 19, making its impact on the Q4 2025 results small.

Thus, the firm’s next earnings release will provide a much better understanding of how impactful the iPhone 17 lineup will be. Whether Apple beats or misses expectations could lead to a significant move in shares. Analysts seem to be clearly leaning toward the prospects of a positive surprise. Early 2026 will be a key time to reassess Apple’s long-term prospects, as its Q1 FY2026 results should be illuminating.