Apple reaches $5 trillion market cap ahead of Cook’s final earnings call

Apple ↘ 0.80% on Tuesday became the first U.S. company to reach a $5 trillion market capitalization, briefly touching the milestone as shares climbed to all-time highs ahead of what is expected to be its strongest June-quarter sales growth in five years. The stock continued to push higher on Wednesday, with shares notching fresh records as investors positioned ahead of Thursday's fiscal third-quarter earnings report.reuters+2

The results will also mark the final earnings call for CEO Tim Cook, who will hand the role to hardware chief John Ternus on September 1 after 15 years atop the company.cnbc

Wall Street Expects a Strong Quarter

Analysts surveyed by LSEG expect Apple to report revenue of $108.65 billion for the April-June period, a 15.5% increase that would represent the company's best fiscal third-quarter growth since 2021. Earnings per share are projected at $1.89, up from $1.57 a year earlier. iPhone revenue is forecast to rise 20.8%, bolstered by Apple's decision to hold iPhone prices steady even as rivals raised theirs amid a global memory chip shortage driven by AI datacenter buildouts.finance.yahoo+1

That pricing restraint appears to have paid off. Research firm Counterpoint estimated that iPhone shipments rose 3% in the quarter, lifting Apple's global smartphone market share to nearly 20%, even as overall industry shipments fell to their lowest level in 13 years.reuters+1

Memory Costs and the AI Question

The quarter was not without headwinds. Apple raised starting prices on iPads and Macs by at least $100 last month to offset surging memory and storage costs, and analysts widely expect iPhone price increases when the next generation is unveiled in September. Gross margins are expected to slip to 47.9% from 49.3% in the prior quarter.tradingview+2

Jefferies analyst Edison Lee warned that rising memory costs could compress iPhone gross margins from 38% to 34.5%, while KeyBanc's Brandon Nispel cautioned that higher prices risk slowing unit and user growth, which could ultimately weigh on Apple's fast-growing services business. Apple's new Apple Upgrade leasing program, announced Tuesday in partnership with Klarna, could help cushion the blow by lowering the upfront cost of devices.cnbc+2

A Safe Haven in a Volatile Market

Apple's stock, up roughly 25% year to date, has widely outperformed its "Magnificent Seven" peers as investors rotated out of AI-heavy chip and semiconductor names and into what they view as a more predictable business. The company has avoided the massive capital spending commitments that have weighed on rivals, instead folding AI into its existing ecosystem.benzinga+2

"Apple was initially scorned by many investors for not joining the AI investment cycle. Now, it is actually being rewarded as investors question the relationship between spending and return on investment," said Dan Morgan, portfolio manager at Synovus Trust.reuters

Still, questions linger over Apple's longer-term AI strategy, including the delayed rollout of a redesigned Siri and an ongoing legal dispute with OpenAI. Those challenges will fall to Ternus, who investors are expected to hear more from on Thursday's call.cnbc