JP Morgan: Apple Inc. (AAPL.US) Q4 financial report expected to deliver good news, resilience in service revenue seen as key to mitigating tariff risks.

JPMorgan Chase released a research report stating that Apple Inc. (AAPL.US) is expected to show positive performance in the fourth quarter of fiscal year 2025, mainly due to the resilience of service revenue and the move of production for the US market to areas outside of China. Analysts led by Samik Chatterjee pointed out in a report released on Monday: "Before Apple Inc. releases its third-quarter earnings report, the impact of 'external link payments' on the growth of its service business is a key issue of concern for investors. However, the growth rate of the service business in the third quarter increased to about 13%, and the guidance for the fourth quarter indicates that the growth rate will remain at a similar level, indicating that the overall impact of 'external link payments' is limited." It is understood that the option for "external link payments" on the Apple Inc. App Store was introduced as a result of a federal court ruling. The ruling requires Apple Inc. to allow users to complete in-app purchases through external channels on iOS apps, which is also part of Apple Inc.'s long-standing legal dispute with Epic Games. JPMorgan Chase also emphasized that Apple Inc. has quickly taken action to shift some of its product production lines from China to countries like India and Vietnam, in order to minimize the impact of semiconductor-related tariffs. Chatterjee said, "Looking ahead to the upcoming quarterly earnings and performance guidance, we expect strong high single-digit revenue growth in the fourth quarter of fiscal year 2025, and the performance outlook for the first quarter of fiscal year 2026 will also confirm to investors that the company is in a positive product cycle. However, the more surprising upside and upward revision of market consensus expectations may come from an increase in profit margins - driven partly by the easing of tariff barriers and partly by the steady growth of service business revenue leading to profit structure optimization. For investors looking to capture clear upward potential, Apple Inc. stock is attractive: the strong iPhone 17 product cycle will bring visible upward momentum, and the subsequent strong cycle of the iPhone 18 series (including foldable screen iPhones) will further consolidate this trend." Apple Inc. is scheduled to announce its latest earnings on October 30th. The market generally expects earnings per share to be $1.77, with revenue reaching $102.19 billion. In the same period last year, Apple Inc. had earnings per share of $1.64 and revenue of $94.93 billion.