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Apple (AAPL) is scheduled to report second fiscal quarter results after the market close on Thursday, May 4, with a conference call scheduled for 5:00 pm ET. What to watch for:

"CHALLENGING ENVIRONMENT": Last quarter, Apple missed consensus sales and earnings expectations, reporting EPS of $1.88 on Q1 revenue of $117.2B, which compared to consensus forecasts of $1.94 and $121.1B, respectively.

Apple CEO Tim Cook said in the earnings release, "As we all continue to navigate a challenging environment, we are proud to have our best lineup of products and services ever, and as always, we remain focused on the long term and are leading with our values in everything we do. During the December quarter, we achieved a major milestone and are excited to report that we now have more than 2 billion active devices as part of our growing installed base."

Subsequent to that report, JPMorgan said the company's fiscal Q1 results highlighted a "rare" earnings miss, led by a "plethora of headwinds," including currency pressures, supply constraints from COVID-19 lockdowns in China, as well as broader macro challenges, such as inflation and the conflict in Eastern Europe. The firm added that Apple's guidance reflected a "deeper down-cycle" in consumer hardware, including in smartphones and PCs. However, the outlook also embeded a fair degree of conservatism from Apple, contended JPMorgan.

More recently, JPMorgan kept an Overweight rating on Apple with a $190 price target heading into the company's report. The analyst expects worsening macro sentiment and investors favoring "flight-to-safety positioning" could triumph any headwinds on the company's fundamentals, to the extent they do not deteriorate materially. The firm believes investors are looking for a stabilization of revenue trends, although at a much lower pace of growth. Apple's valuation multiple is "not egregious" when accounting for depressed earnings power driven by the consumer pullback, the analyst told investors in the firm's preview note.

In its own earnings preview, Wedbush said that based on the firm's recent Asia supply chain checks, Apple should post at least in-line iPhone revenues when the company reports Thursday after the bell. The firm believes iPhone units based on a clear uptick in demand around the key China region this quarter could show some upside despite the shaky macro backdrop as higher average selling prices and overall upgrade activity on iPhone Pro 14 "carry the day." With an App Store uptick this quarter, Wedbush also thinks Services revenue should be stable and combined should translate into headline numbers that "should at least meet the Street's expectations." The firm maintains an Outperform rating and $205 price target on Apple shares.

While Apple missed expectations last quarter, many of its mega-cap tech brethern - including Amazon (AMZN), Google-parent Alphabet (GOOGL), Microsoft (MSFT) and Meta Platforms (META) - have recenly beat consensus forecasts for earnings and revenue.

Current consensus EPS and revenue forecasts for Apple's March-end quarter stand at $1.43 and $92.96B, respectively, according to data provided by Refinitiv. That earnings estimate for the fiscal second quarter is down from where it stood 90 days ago at $1.48 per share, according to Refinitiv. Consensus EPS and revenue forecasts for Apple's June-end quarter stand at $1.22 and $84.71B, respectively, according to Refinitiv data.

DOUBLING DOWN ON INDIA: On April 13, Bloomberg's Sankalp Phartiyal reported that Apple made more than $7B worth of iPhones in India in the fiscal year ended March 2023, exporting roughly $5B worth. India currently accounts for about 7% of iPhones made, up from about 1% in 2021, people familiar with the matter are quoted as having said. Apple is exploring ways to reduce its reliance on China amid escalating tensions between Washington and Beijing, the report noted.

On April 17, Apple announced the opening of its first retail location in India, calling it "one of the company's most sustainable stores yet." "Located in Mumbai's bustling Bandra Kurla Complex financial, arts, and entertainment district, Apple BKC will serve as a dynamic space where customers can come together, explore Apple products and services, enjoy exceptional service, and learn how to get more out of their devices," the company stated.

Wedbush noted that Apple would be cutting the red ribbon on the first India retail stores this week in Mumbai and New Delhi. For years, Apple has "tangentially gone after the India market with some success" as India revenue is only roughly $6B today with minimal presence in the country, but that dynamic will be changing as Apple is now aggressively looking at India from both a production and retail expansion over the coming years, the firm stated. This will be "a strategic poker move for Cupertino" that could ramp annual revenue to $20B by 2025 in India, said Wedbush, which maintains an Outperform rating on Apple shares.

On April 19, Apple CEO Tim Cook thanked India's Prime Minister Narendra Modi for a "warm welcome" in a tweet after Cook met with Modi in the South Asian country. "We share your vision of the positive impact technology can make on India's future - from education and developers to manufacturing and the environment, we're committed to growing and investing across the country," Cook tweeted.

PRODUCT HEADLINES: During the quarter, other stories on Apple's future product roadmap have included:

• Apple testing Mac laptop with larger display, better processors, Bloomberg says
• Apple mixed-reality headset coming in June for around $3,000, Bloomberg says
• Apple working on AI-powered health coaching service, Bloomberg says

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