How Will Services, Mac and iPad Fare in Apple's Q3 Earnings?
Introduction of Apple Intelligence, an advanced personal intelligence system seamlessly integrated into iOS 18, iPadOS 18, and macOS Sequoia, is helping Apple sell more of its devices, including the iPhone.
The Services business is expected to have benefited from a growing installed base of devices as well as subscriber base of its offerings, including Apple TV+, Apple Pay, Apple Music and more. Apple had more than 1 billion paid subscribers across its Services portfolio at the end of the fiscal second quarter. Paid subscriptions grew double-digits, a trend expected to have continued in the to-be-reported quarter.
However, while Mac sales are expected to grow year over year, iPad is anticipated to decline.
Apple Inc. Revenue (TTM)
Click here to learn how Apple's overall fiscal third-quarter earnings results are likely to be.
Services Growth to Ride on Apple TV+, Strong Install Base
Severance, along with Ted Lasso, Slow Horses, Silo, and The Gorge, are a few of the Apple TV+ shows and movies that have gained fame in recent years. The company leverages Apple TV+, along with Apple Music, Apple Arcade, and Apple Pay, to attract users to its Services portfolio, which currently has more than 1 billion paid subscribers, more than double what Apple had four years ago.
However, Apple TV+ is suffering from stiff competition in the streaming space from the likes of Disney 's DIS Disney+, Netflix NFLX and Peacock.
For the fiscal third quarter, Disney expects a modest increase in its Disney+ subscriber base on a sequential basis. Disney closed the second quarter of fiscal 2025 with 180.7 million total streaming subscribers, representing a 2.5% sequential increase. Netflix's strong content performance across global markets, including hits like Exterritorial (89M views) and Tyler Perry's STRAW (109M views), drove member growth that exceeded forecasts in the second quarter of 2025. The quarter was highlighted by Squid Game S3 becoming Netflix's sixth biggest season ever with 122M views.
The Zacks Consensus Estimate for third-quarter fiscal 2025 Services is pegged at $26.96 billion, suggesting 11.3% year-over-year growth.
Apple to Benefit From Y/Y Growth in Mac Sales
The PC segment climbed up in the second quarter of calendar 2025. Per IDC, Apple had a market share of 9.1%, up 110 basis points (bps) on a year-over-year basis. Shipment grew 21.4% year over year to 6.2 million. Per Gartner, Apple had a market share of 9%, up 70 bps year over year.
Apple's estimated shipment growth rate is the largest in IDC's vendor list, followed by ASUS and Lenovo's growth of 16.7% and 15.2%, respectively. Dell Technologies ' DELL shipment declined 3%, while HP saw shipment growth of 3.2%. According to Gartner's list, Lenovo was placed at the #1 spot with shipment growth of 13.9%, trailed by Apple's 13.4% and ASUS' 8.7%. Dell Technologies' shipment declined 3%, while HP saw growth of 3.2%.
The Zacks Consensus Estimate for fiscal third-quarter Mac net sales is pegged at $7.16 billion, suggesting 2.2% year-over-year growth.
Apple's iPad Sales to Decrease Y/Y
iPad accounted for roughly 6.7% of fiscal third-quarter net sales. Strong demand for iPad Pro and the launch of 11-inch and 13-inch iPad Air benefited sales, which increased 15.2% year over year to $6.4 billion.
However, iPad revenues are expected to have suffered from sluggish demand in the to-be-reported quarter.
The Zacks Consensus Estimate for fiscal third-quarter iPad net sales is pegged at $6.78 billion, suggesting 5.3% year-over-year decline.
Zacks Rank
Apple currently has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 (Strong Buy) Rank stocks here.
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