Apple Inc (NASDAQ:AAPL) stock traded higher on Monday on the heels of a new partnership with Google. An analyst sees a strong setup for Apple stock ahead of first-quarter financial results expected later this month.
The Apple Analyst: Bank of America analyst Wamsi Mohan reiterated a Buy rating on Apple stock with a price target of $325.
The Analyst Takeaways: Apple CEO Tim Cook predicts the technology giant will break some records in the first quarter and a new note from Mohan could strengthen that argument for investors.
"We expect Apple to report a strong Dec quarter with iPhones sales remaining strong," Mohan said. "We see gross margins expanding sequentially for both the Dec and Mar quarters."
The analyst says Apple stock has a "bullish setup into earnings with upcoming catalysts later in the year."
Mohan expects first-quarter revenue to come in above estimates with strong sales of iPhone and double-digit Services revenue likely.
For the iPhone, Mohan estimates that 85 million units were sold in the first fiscal quarter, up two million units from the analyst's last estimate. The analyst also raises the second-quarter iPhone estimate by one million units to 54 million smartphones.
"We see demand for iPhone 17 remaining strong."
The analyst said iPhone revenue in the first quarter could be up 17% year-over-year, which would be one of the best quarters ever for the smartphone.
Looking further into 2026, Mohan said rising memory costs could be a headwind for Apple, but a "manageable" one. The analyst sees two major catalysts coming for Apple later in the calendar year.
"Upcoming catalysts include launch of a foldable iPhone in the fall & launch of an enhanced Siri with integration with Gemini AI which can drive higher upgrades."
The analyst said form factor changes for the iPhone have helped with replacement rates.
Mohan said investor sentiment on Apple stock is fairly negative, which could be due to higher memory costs impacting the technology sector.
"Apple remains underweight in investor portfolios which we see reversing this year."
AAPL Price Action: Apple stock is up 0.34% to $260.25 on Monday versus a 52-week trading range of $169.21 to $288.61. Apple shares are up 11.3% over the last 52 weeks.
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