TODAY'S CHARTS: Why a big revenue beat could be a bad sign for Apple

Apple (AAPL) is set to release earnings after the bell. While top and bottom line results will grab headlines, investors will be closely watching Apple’s forward guidance.

Shares have climbed 16% in the last 6 months, largely on anticipation of the iPhone 8—Apple’s 10th anniversary phone—which is expected to launch this fall with wide-ranging new features.

Analysts have high hopes for the phone, with some expecting it to trigger a new upgrade “super cycle.” Given that over 50% of iPhones currently in use are vintage 2014 or older, many users are in the market for an upgrade.

Apple expects a ‘pause’ on sales

Apple’s revenue for the quarter is expected to be $44.89 billion, above what it was a year ago, but well below 2015 levels.

In May, CEO Tim Cook told investors, “We’re seeing what we believe to be a pause in purchases on iPhone, which we believe is due to the earlier and much more frequent reports about future iPhones.”

However, if revenue comes in too strong this quarter, it could be viewed as a bad sign, since it would mean people aren’t holding off new phone purchases in anticipation of the iPhone 8.

Timing of the iPhone 8

It will be key to watch Apple’s forward guidance, as it might give investors some clues when to expect the iPhone 8. Usually new phones launch in September (right at the end of Apple’s Q4), but supplier issues might cause Apple to delay the release until October or later.

If Apple forecasts revenue significantly below $49 billion, UBS analysts say this could signal that Apple is expecting a delay.

On the other hand, a forecast of over $51 billion (Apple’s revenue record in 2015) could suggest the iPhone 8 is on time and that Apple expects strong sales.

Apple’s diversification strategy

Finally, investors will be closely watching Apple’s diversification strategy, including the growth of its services business and demand in China.

Apple generates about 12% of its revenue from services, including such apps as Apple Pay and Apple Music. Last year, Tim Cook said he expects the services business to become the “size of a Fortune 100 company.” Investors will be looking for meaningful growth in this area, as it will be key to Apple’s long-term growth.

Meanwhile, Apple has been struggling with sales in China. Revenue from China is expected to slump 8.3% from a year before—better than the 33% decline last year, but relatively weak for the world’s largest cellphone market.

For more on Apple’s earnings, check out The Final Round, starting at 3:55 p.m. ET, right here on Yahoo Finance.