How Apple Neutralized Any Short-Term Weakness The Market Was Anticipating

Apple, Inc. AAPL shares have been hitting the top gear in recent sessions, and sell-side views on the company's quarterly results due Aug. 27 suggest the rally is likely to accelerate.

Street Estimates May Prove Conservative: Apple is likely to report another across-the-board beat quarter, Wedbush analyst Daniel Ives said in a note. The fiscal-year third-quarter consensus estimates that call for revenues of $73 billion and earnings per share of $1 look conservative, given the underlying iPhone strength, especially in China, he said.

Chip shortage, according to the analyst, was an overhang for Apple during the quarter.

The short-term weakness the Street was anticipating three months ago hasn't materialized, as Apple countered any potential softness with iPhone and Services segment strength, Ives said.

Related Link: Why This Apple Stock Analyst Says It's Time To Buy

Focus Shifts to iPhone 13 Launch: With the focus shifting to the launch of the next iteration of the iPhone, initial Asia supply chain build data for iPhone 13 is encouraging, the analyst said. The 5G-driven product cycle will extend well into 2022 and also benefit from a post-vaccine consumer "reopening environment."

The analyst expects the iPhone 13 to be launched in the third week of September.

A Top Tech Name: The tech bull cycle will continue in its upward move in the second half of 2021 and 2022, Ives said. This is premised on the "scarcity of growth names/ winners in the market."

"Our favorite large cap tech name to play the 5G transformational cycle is Apple, with the 1-2 punch of its massive services business and iPhone product cycle translating into a $3 trillion market cap for Cupertino during 2022 in our opinion," Ives wrote.

Wedbush said Apple continues to be a top tech name to own. Ives has an Outperform rating and $185 price target for shares.

AAPL Price Action: At last check, Apple shares were rallying 1.44% to $147.49.