What you need to know

  • Analyst firm Cowen predicts Apple could post a record $90 billion in earnings for Q4
  • The optimistic prediction is based on increased iPhone 11 demand and strong peformance of services.
  • Says iPhone production could reach 69 million for the quarter.

An Investor note from Cowen seen by AppleInsider predicts that Apple could post a record $90 billion in earnings for Q4. The prediction is based on strong iPhone 11 demand, along with growing services.

According to the report:

"Recent... third party data suggests the recent price cut to the XR model and newly launched 11 are seeing healthy demand," says the investor note. "Continued expansion in the iPhone trade-in program and 0% financing options are also expected to play a part in improving affordability."

"We think gaming driven revenues in China are likely now normalized after the catchup in game approvals earlier in the year and could be seasonally up," it continues. "We expect AppleCare (correlated with new device units) to be seasonally up in the Sep Q, Apple Music to be up seasonally."

Cowen predicts Apple will produce 69 million iPhones, up from a previous estimate of 63 million. It also states that the iPhone 11 is off to a solid start and that Apple TV+ will bring a boost to service revenue.

Looking ahead the note also gives a nod to an update on US import tarrifs on December 15, which could impact sales. Of course, the mythical iPhone SE 2 also got a mention:

"We do also believe Intel could remain in the supply chain as a supplier of 4G modems for the potential low-cost iPhone SE2 model in the first half of 2020."

The note also mentions that whilst future plans point to Apple using Qualcomm as a supplier for its modems (in particular for 5G devices), it estimates that Apple will look to develop its own discrete modem, possibly appearing in 2022. The note also encourages investors to pay special attention to Apple's earnings call on October 30, as Cowen believes Apple will details some kind of information regarding iPhone trends in China/India.