When Apple reports its holiday quarter results on Wednesday, analysts expect nothing short of a record-setting blockbuster.

Fueled by pandemic buying of personal computers running Apple’s new M1 processor and its new line of 5G-compatible phones, Apple brought in $103.1 billion of sales, its first-ever quarter over $100 billion and a 12% increase from a year earlier, according to the average analyst estimate. Earnings per share are forecast to hit $1.41, up 13% from a split-adjusted $1.25 a year ago.

At Monday’s closing price of $142.92, investors have already driven Apple’s stock price up 24% over the past three months and 80% over the past year, putting its stock market capitalization at over $2.3 trillion.

Hitting a work-from-homerun

Analysts say the iPhone maker will have to surprise the market and report substantially more than the average forecast to get the stock moving much higher.

“Despite a strong 5G iPhone cycle, we see the high bar of investor expectations,” JPMorgan Chase analyst Samik Chatterjee wrote in a report on Monday. Even if Apple were to report $106 billion to $107 billion of sales, the stock would only gain a few percentage points, he noted. Consumers are already shifting towards lower-priced models of the iPhone 12 line up and will spend elsewhere in 2021, he says.

David Vogt, who follows Apple for UBS, sees the company’s sales beating the average forecast with little effect on the stock price. More consumers are buying the high-end iPhone 12 Pro and iPhone 12 Pro Max models than he had initially expected, prompting the analyst on Monday to raise his revenue forecast to almost $107 billion from $99 billion previously. Vogt, too, believes the better-than-expected results won’t send the stock much higher. The upside is “likely reflected in the stock” already, he writes.

At Morgan Stanley, however, analyst Katy Huberty remains bullish with an “overweight” rating on Apple. “In our view, the iPhone 12 has been Apple’s most successful product launch in the last 5 years,” she wrote in a report last week. She also expects strong sales of Apple’s new Mac computers featuring the M1 processor chip it designed in-house and other products like iPads that are useful for working and studying at home. “Data through mid-January shows little sign of work from home demand abating,” she noted.

Post-pandemic prospects

Still, some analysts warn that expectations have gotten far ahead of consumers’ phone-buying desires. Most carriers in the U.S. are still in the midst of building out new super-fast 5G networks and there are not yet any compelling applications for consumers that require 5G.

“We continue to expect iPhone replacement rates to resume their ongoing decline in 2021 and this drives our below consensus forecasts for the year,” Goldman Sachs analyst Rod Hall noted on Jan. 14. He rates Apple shares a “sell” with a target of $80, 44% below Monday’s closing price.

“We believe the shift of consumer disposable income toward vacations, restaurants, and other outside of the home spending as re-opening occurs is likely to act as a negative catalyst for Apple’s stock just as COVID lockdowns represented a tailwind,” Hall wrote.

Virtual reality?

CEO Tim Cook doesn’t typically give away much about Apple’s future plans on the company’s quarterly earnings calls. Analysts may try to ask about recent rumors of Apple’s plans to sell an electric car and a virtual reality headset. Cook will likely offer his standard reply that he doesn’t talk about unannounced products.

One risk for Apple is supply shortages in the semiconductor industry, where many foundries are already working overtime and don’t have room to expand. Shortages of chips have already hurt car production and could hit Apple in 2021, Cowen analyst Krish Sankar noted in a report last week.

“Tight supply of certain chips such as display driver [chips)] could be near-term risks from an operational execution and revenue standpoint,” Sankar wrote. “Tight foundry industry capacity for analog and power semis could limit the production of LCD displays and ultimately finished Mac systems.”