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All eyes are on technology giant Apple (AAPL - Free Report), which is set to release third-quarter fiscal 2024 results after market close on Aug 1. Since Apple accounts for nearly 7% of the total market capitalization of the entire technology sector on the S&P 500 Index, it is worth taking a look at its fundamentals ahead of its quarterly results. 

Apple reclaimed the most valuable title last month and emerged as one of the strongest performers relative to the other “Mag 7” amid the recent sell-off. The stock has gained about 28.5% over the past three months, outperforming the industry’s growth of 8.4%. The solid trend is expected to continue, given that the tech giant has a strong chance of beating earnings estimates. It has seen positive earnings estimate revision activity, which is generally a precursor to an earnings beat.

Image Source: Zacks Investment Research

This has put investors’ focus on ETFs having the largest allocation to the tech titan. Vanguard Information Technology ETF (VGT - Free Report), MSCI Information Technology Index ETF (FTEC - Free Report), iShares US Technology ETF (IYW - Free Report), iShares Russell Top 200 Growth ETF (IWY - Free Report) and Vanguard Mega Cap Growth ETF (MGK - Free Report) have Apple as the top or second firm with a double-digit allocation. These ETFs have a Zacks ETF Rank #1 (Strong Buy) or 2 (Buy).

Inside Our Methodology
 

Apple has an Earnings ESP of +0.30% and a Zacks Rank #2 (Buy). According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. 

Apple saw a positive earnings estimate revision of a penny over the past seven days for the fiscal third quarter. Analysts raising estimates right before earnings — with the most up-to-date information possible — is a good indicator for the stock. The Zacks Consensus Estimate indicates modest year-over-year growth of 6.3% for earnings and 3.2% for revenues. The company has a strong track record of positive earnings surprises. It delivered an average earnings surprise of 4.14% in the trailing four quarters. 

The stock currently has an average brokerage recommendation (ABR) of 1.62 on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 30 brokerage firms. The current ABR compares to an ABR of 1.68 a month ago based on 30 recommendations. Of the 30 recommendations deriving the current ABR, 20 are Strong Buy, and three are Buy. Strong Buy and Buy, respectively, account for 66.67% and 10% of all recommendations. A month ago, Strong Buy made up 63.33%, while Buy represented 10%.

Based on the short-term price targets of 32 analysts, the average price target for Apple comes to $232.22. The forecasts range from a low of $180.00 to a high of $300.00. 

What to Watch
 

Apple, which was way behind its competitors in adopting AI, is finally turning around following the launch of a brand-new AI feature called Apple Intelligence for iPhones, iPads, and Macs in June. The introduction of numerous AI-powered features is expected to kickstart the next upgrade cycle, enhancing the company's performance and restoring investor confidence in Apple.

The technology will help summarize text, create original images, and retrieve the most relevant data when users need it. Apple also announced a partnership with ChatGPT-maker OpenAI, which provides customers access to ChatGPT via Siri at no extra cost. The company released a beta version of its new iOS 18.1 to developers early this week, offering the first look of Apple Intelligence and some of the iPhone maker's new artificial intelligence features.

According to LSEG data, the tech titan is expected to win back some customers in China with big iPhone discounts and by selling more high-margin iPads with a refreshed design. iPhone sales are expected to decrease 2.2% in the to-be-reported quarter, a big improvement from the 10.5% decline in the second quarter. This suggests that the worst might be over for Apple.

For the fiscal third quarter, the iPhone maker expects overall revenues "to grow low-single digits" and iPad revenues to grow in double digits.

ETFs in Focus
 

Vanguard Information Technology ETF - Apple accounts for a 16.1% share.

MSCI Information Technology Index ETF - Apple accounts for a 16% share in the basket. 

iShares US Technology ETF - Apple makes up 16.1% of the assets.

iShares Russell Top 200 Growth ETF - Apple accounts for a 13.8% share in the basket.

Vanguard Mega Cap Growth ETF - Apple accounts for 12.4% of the total assets

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