Apple Q2 earnings preview: Apple Inc is expected to deliver earnings per share (EPS) of $1.53 on revenue of $90.7 billion for the second quarter of fiscal year 2024, according to global investment bank Goldman Sachs. However, the iPhone segment is expected to face headwinds, with revenue projected to decline by 11 per cent year-over-year (Y-o-Y) due to tough year-ago comparisons. Despite this, Mac revenue is expected to remain largely flat annually, driven by the launch of new MacBook Air products.

Additionally, declines are expected in iPad (-17 per cent Y-o-Y) and Wearables, Home, and Accessories (-6 per cent) segments, attributed to challenging year-ago comps. On the positive side, services revenue is predicted to grow by 14 per cent Y-o-Y, supported by services price increases and strong App Store spending.

Looking ahead to the third quarter of fiscal year 2024, Goldman Sachs forecasts EPS of $1.29 on revenue of $82 billion, slightly below consensus estimates. Analysts expect Apple to guide for flat Y-o-Y revenue growth in the third quarter, with declines in iPhone revenue offset by growth in iPad revenue from new product launches and continued growth in services.

Goldman Sachs believes that a potential guidance miss for the June quarter could be the "last cut," with expectations of Apple guiding below consensus. The firm's projections for iPhone revenue for the third quarter are lower than consensus estimates, reflecting ongoing challenges such as competition in China and a lukewarm iPhone 15 product cycle.

However, analysts suggest that the June quarter earnings could mark a turning point in sentiment, especially with upcoming catalysts such as Apple’s Worldwide Developers Conference (WWDC) in June 2024 and the launch of iPhone 16 in September.

In terms of AI features, Goldman Sachs highlights recent research papers published by Apple researchers, indicating a focus on improving mobile user interface understanding and on-device AI frameworks. Analysts speculate that these developments could pave the way for innovative AI-powered features such as predictive text and AI-enhanced photo/video editing.

Despite near-term challenges, Goldman Sachs remains optimistic about Apple's long-term prospects, especially with the expected launch of iPhone 16 and new product innovations driving unit growth. Signs of stabilisation in the global smartphone and PC industries also provide a favourable backdrop for Apple’s future performance.