Apple sentiment is weak going into earnings. Why investors should ‘look past the noise.’

Concerns over the iPhone in China. Concerns about the iPhone in general. Sentiment on Apple (NASDAQ:AAPL) is decidedly weak headed into the company’s fourth-quarter results, slated to be released on Halloween.

And while many investors are fretting over the health of the iPhone and its long-term future, several Wall Street firms believe investors should “look past the noise.”

Bank of America analyst Wamsi Mohan, who has a Buy rating and $256 price target on Apple, said the staggered launch of Apple Intelligence is likely to result in a pickup in demand later this month.

“Given the staggered launch of Apple Intelligence, we expect iPhone demand to pick up post initial release of Apple Intelligence in late Oct.,” Mohan wrote in a note to clients. “iOS 18.2 Beta reflects integration with ChatGPT and initial feedback suggests it will be compelling.”

This time it’s different?

The “it’s different this time” is one of the most cautious phrases on Wall Street, but Mohan suggests that this iPhone cycle is indeed different from past ones, given how Apple is being careful with the rollout of Apple Intelligence.

“In our opinion, contrary to every cycle where all the hardware/software functionality is more or less static through the course of the cycle, we view the cycle as more dynamic with more material software updates that increases the value to the user,” Mohan added.

“As Visual Intelligence, ChatGPT integration and broader Apple Intelligence features become more mainstream and improved over time, the value of personalization will likely become increasingly relevant. Given the sensitivity to EPS for 1mn iPhones is roughly $0.01 in EPS, we would look past any noise of iPhones tracking better or worse in the short term.”

Mohan said he expects roughly 52M iPhone units to be sold in the September quarter and 80M in the December quarter, with “marginally higher” average selling prices, given the strong demand for the iPhone 16 Pro.

Any added strength from the company’s new AirPods, Apple Watch, new MacBooks and new iPads should also be a boost for the December quarter, Mohan added.

Sentiment

TD Cowen analyst Krish Sankar also noted that sentiment on Apple is “markedly negative” going into the quarterly results, amid concerns about year-over-year comparisons, China and regulatory risks to its Services business.

And while some of those concerns remain, any upbeat commentary from Apple’s management team would be considered a positive, Sankar said.

“Overall, we expect AAPL to report in-line Sep Q results and guide in line to below consensus for the Dec Q,” Sankar, who has a Buy rating and $250 price target on Apple, said.

A consensus of analysts expect Apple to earn $1.55 per share on $94.26B in revenue.