Initial Thoughts on Apple’s Strong 3Q25 Earnings
Hello everyone. Welcome to a special Friday edition of Above Avalon Daily. Apple reported 3Q25 earnings yesterday (Thursday). The results can be viewed here. Today's update will go over my initial thoughts on the release and earnings call. We will continue our discussion next week.
Have a great weekend.
Let's jump right into today's update.
Initial Thoughts on Apple’s Strong 3Q25 Earnings
Yesterday, Apple reported its strongest quarterly results in more than three years. Overall 3Q25 revenue was up 10%. We need to go back to 1Q22 for the last time Apple reported double-digit revenue growth (+11.2%). Results for iPhone and Mac were legitimately good. iPhone revenue was up 13% (strongest quarterly revenue growth since 4Q21) while Mac revenue was up 15% continuing what has been an upturn in the Mac business.
While the iPhone and Mac were the two Apple product categories that stood to see the greatest impact from a pull forward in demand related to tariff fears, Apple said such pull forward was not the primary driver for the strong quarterly performance. For iPhone, approximately 20% of 3Q25 revenue growth was attributed to pull forward. Overall, about 10% of Apple’s 3Q25 revenue growth was related to pull forward.
Apple also said iPhone channel inventory
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My Apple 3Q25 Earnings Estimates, Above Avalon Expectation Meters
Happy Wednesday.
A few quick housekeeping items.
Daily Updates Schedule. With Apple releasing earnings tomorrow (Thursday) after market close, the next update will go out on Friday.
Updated / Revised Financial Models. My updated Apple earnings model (works with Excel and Numbers) is now available to members with the Financial Models add-on attached to their Above Avalon Daily subscription. For those of you with the add-on, log into the Above Avalon payer portal (here). Once signed in, go to the "Digital Package" tab which will bring you to your personalized page where the model can be downloaded. In addition to the updated earnings model being available, my iPhone, iPad, and Apple Watch installed base models have also been updated ahead of Apple earnings. If you are interested in accessing these models, learn more about the Financial Models add-on by going to this page.
Let’s jump in.
My Apple 3Q25 Earnings Estimates
Here are my expectations for Apple’s key 3Q25 metrics:
Revenue: $89.9B (consensus is at $89.2B).
EPS: $1.47 (consensus is at $1.43).
iPhone revenue: $40.9B.
Services:
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Thoughts Heading Into Apple’s 3Q25 Earnings Release
Hello everyone. Apple reports earnings on Thursday. For today's update, we will begin to prepare for the earnings release.
Thoughts Heading Into Apple’s 3Q25 Earnings Release
As we will discuss in greater detail tomorrow, Apple’s 3Q25 results should be relatively fine. Revenue growth will likely be close to 2Q25 levels while margins may get dinged a little bit by tariffs. And yet, the numbers themselves probably won’t matter a whole lot. Instead, Apple finds itself stuck in mud on Wall Street. A growing list of headwinds have contributed to Apple shares experiencing some of their worst underperformance relative to peers and the market in recent memory.
While every other Big Tech company has moved notably higher from the tariff-induced lows of early April, Apple has barely participated.
Become a member to continue reading today’s update. Already a member? Read the full update here.
An audio version of this update is available to members who have the podcast add-on attached to their membership.
Member Privileges and Benefits
Become an Above Avalon member and receive the following privileges and benefits:
Exclusive Analysis. Receive the Above Avalon Daily newsletter, widely-recognized as the leading daily newsletter dedicated to Apple. Now in its tenth year.
Archive Access. Access previous newsletters sent to members.
Member Forum Access. Access all channels in the Above Avalon forum in Discord.
Email Access. Receive timely responses from Neil to email inquiries.
Access to Add-ons. Customize a membership with the AVALON, Podcasts, Inside Orchard, and Financial Models add-ons.
Above Avalon Support. Play an active role in supporting Above Avalon as an independent voice and resource.