Apple Shares Rally Ahead of Q3 Earnings: Can It Last?

The Zacks Consensus Estimate for Apple’s upcoming quarter’s EPS and revenue is $1.88 and $108.8 billion, marking year-over-year EPS and revenue growth of 19.75% and 15.64%, respectively.

Shares have climbed more than 20% year to date, trading near record highs. Apple shares (up 19.6%) topped the Nasdaq-100 based ETF QQQ (down 5.8%) over the past month (as of July 27, 2026). Roundhill Magnificent Seven ETF MAGS also has dipped 0.8% over the past month.

Inside Our Surprise Prediction

According to our methodology, a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) when combined with a positive Earnings ESP, increases the chances of an earnings beat, while companies with a Zacks Rank #4 or 5 (Sell rated) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Apple has a Zacks Rank #3 and an ESP of 2.46%. Note that Apple has exceeded the Zacks Consensus Estimate for earnings in each of the trailing four quarters, with an average surprise of 7.34%.

Disciplined AI Strategy in Focus

Unlike cloud giants spending aggressively on AI infrastructure, Apple has maintained a capital-light AI strategy. Apple plans to spend $14 billion on capital expenditures in 2026, while Amazon, Microsoft, Meta and Alphabet plan to spend a combined $650 billion, per a source.

Investors have probably rewarded this disciplined approach lately as concerns over AI spending have pressured peers like Alphabet, Microsoft, Meta and Amazon. Note that Apple's AI strategy focuses on partnerships and third-party technologies rather than investing heavily in proprietary AI infrastructure.

Key Metrics to Watch

Beyond AI, investors will closely monitor iPhone demand and Services revenue, Apple's fastest-growing and highest-margin business.

In late June, Apple announced price hikes for MacBooks and iPads, marking its first move to pass higher memory and storage costs on to consumers. The AI push gives Apple another reason to emphasize higher-memory configurations.

IDC expects all new iPhone models to feature 12GB of RAM, as advanced on-device AI features require more memory, according to CNBC. Apple said it has reached a point where price increases on more products have become necessary, signaling further hikes ahead, as quoted on CNBC.

Tarun Pathak, research director at Counterpoint Research, estimated at the time that higher component costs could add roughly $200 per iPhone for Apple, according to the same CNBC source.

Demand for iPhones remains healthy despite supply constraints. Management expects June-quarter revenue growth of 14% to 17% year over year. In the June quarter of 2025, iPhone revenue was $44.6 billion.

This means the company is expected to generate $50.8-$52.2 billion in iPhone sales. Meanwhile, the Services segment is projected to remain a major growth driver, supported by Apple Intelligence and subscription offerings.

Any Wall of Worry?

Skeptics argue that Apple's premium valuation—nearly 40 times trailing earnings—sets a very high bar. Any weakness in iPhone demand, softer guidance or signs of slowing growth could trigger profit-taking, even if quarterly results meet expectations. Among the Magnificent Seven stocks, Apple has the highest P/E ratio.

Price Target

Based on short-term price targets offered by 39 analysts, the average price target for Apple comes to $320.61. The forecasts range from a low of $235.00 to a high of $400.00. The average price target represents a decline of 4.8% from the last closing price of $336.91.

Apple-Heavy ETFs in Focus

Against this backdrop, investors can play Apple through a diversified ETF approach to minimize company-specific concentration risks. This approach allows investors to benefit from any potential rally in Apple shares.

Global X PureCap MSCI Information Technology ETF GXPT – Apple weight 18.20%

Fidelity MSCI Information Technology Index ETF FTEC – Apple weight 15.4%

iShares Top 20 U.S. Stocks ETF TOPT – Apple weight 14.0%

VanEck Technology TruSector ETF TRUT – weight 13.6%

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This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research