Apple stock: UBS explains why Q2 earnings will come in strong

Apple (NASDAQ: AAPL) is inching higher heading into its much-anticipated Q2 earnings report, which is scheduled to be released on April 30^th (after market close).

Consensus is for the iPhone maker to post $1.92 a share of earnings on nearly $110 billion in revenue. This would represent a mid-teens year-on-year increase on both the top and bottom line.

Apple stock has already rallied some 10% this month, but UBS analysts led by David Vogt believe it will rally further after the quarterly release.

UBS raises price target on Apple stock

UBS has raised its price target on AAPL shares heading into the titan’s Q2 earnings release.

It now sees them hitting $287 this year, signaling potential for another 7% rally from here.

According to analyst David Vogt, “supply chain strength and sustained demand “should see iPhone revenue come in up some 20% on a year-over-year basis in the second quarter.

This would be particularly impressive given the global memory supply crunch that’s hurting many of Apple’s rivals.

In his research note, Vogt lauded Apple’s strategic ability to secure critical components like RAM for its MacBook Neo and iPhone 17, which he believes is helping the giant grow market share.

The UBS analyst raised his revenue estimate for Q3 as well, suggesting the momentum is far from a one-quarter wonder.

Where options data suggests AAPL shares are headed

The derivatives market seems to share Vogt’s optimism on Apple's share heading into the Q2 print.

According to Barchart, the “put-to-call ratio” on options contracts expiring May 1^st – immediately following the earnings release – sits at 0.38 currently, indicating a strong bullish skew.

Meanwhile, the upper price of about $280 on those contracts suggests AAPL could be trading north of 3% higher from here right after the quarterly report.

Note that Apple Inc currently sits decisively above its major moving averages (MAs), with an RSI in the late 50s indicating potential for continued upward momentum ahead.

What could weigh on Apple after Q2 earnings release

On the flip side, negative surprises on some fronts in the Q2 print could distort AAPL stock’s long-term outlook.

For example, investors are unlikely to respond well if management signals any macro weakness in key markets like China, where consumer demand has been historically sensitive to trade tensions.

Moreover, mention of production delays for the upcoming holiday cycle or a lack of innovation in the “Physical AI” integration could dampen sentiment.

Apple must also address the rising costs of memory components for its share price to extend gains.

If any of these concerns end up triggering a post-earnings sell-off in AAPL, it would be a reminder for investors that even the world’s most valuable companies are “not” immune to global economic headwinds.