Last week, Apple (NASDAQ:AAPL) reported that earnings growth accelerated in the quarter ending in September. Earnings per share rose 20% year over year to $1.42, smashing the average analyst estimate of $1.31. And revenue reached $42.1 billion, well above the $37 billion-$40 billion guidance range Apple provided in July.

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Demand for the iPhone 6 Plus has vastly exceeded production capacity. Photo: Apple.

Apple also provided bullish guidance, thanks to strong demand for the new iPhone 6 and iPhone 6 Plus models. The company is projecting $63.5 billion-$66.5 billion in revenue this quarter. Yet Apple could be lowballing its guidance, because it is having trouble determining just how strong iPhone demand is. In fact, Apple could hit $70 billion in quarterly revenue this fall.

Guidance getting more conservative
One reason to expect Apple to beat its revenue guidance is its history of doing just that. Up until a couple years ago, Apple regularly beat its guidance by a wide margin due to its practice of offering extremely conservative guidance. In the most extreme case, Apple projected EPS of $9.30 for the final full quarter of 2011, but ultimately reported EPS of $13.87.

In January 2013, Apple finally abandoned its policy of offering what was essentially "worst-case scenario" guidance. Since then, it has tried to provide more realistic forward looks.

Nevertheless, Apple has still leaned toward being conservative. Let's look at Apple's revenue guidance for the last seven quarters (since the guidance policy change) versus its actual results:

Quarter

Revenue estimate

Actual revenue

March 2013

$41 billion-$43 billion

$43.6 billion

June 2013

$33.5 billion-$35.5 billion

$35.3 billion

Sept. 2013

$34 billion-$37 billion

$37.5 billion

Dec. 2013

$55 billion-$58 billion

$57.6 billion

March 2014

$42 billion-$44 billion

$45.6 billion

June 2014

$36 billion-$38 billion

$37.4 billion

Sept. 2014

$37 billion-$40 billion

$42.1 billion

Source: Apple quarterly earnings reports. 

In those seven quarters, revenue has never come in below the midpoint of Apple's guidance range. In four of the seven quarters, revenue exceeded the top end of the guidance range. Over these seven quarters, Apple has reported on average revenue about $500 million above the top of its guidance range.

iPhone sales surging
Apple's growth this fall will be propelled primarily by the iPhone. Last quarter, Apple grew its revenue by $4.65 billion year over year, of which $4.17 billion -- or 90% -- was attributable to the iPhone product line. While there were ups (Mac) and downs (iPad) across the rest of Apple's product portfolio, the net impact on Apple's revenue was small.

Assuming non-iPhone sales remain flat in the current quarter (which is probably a conservative estimate), Apple would need to boost iPhone revenue from $32.5 billion to $44.9 billion to hit $70 billion in quarterly revenue. This level of growth would be quite impressive, but it is achievable.

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The rate of iPhone 6 sales vastly exceeds anything Apple has achieved before. Photo: Apple.

Adoption of the iPhone 6 appears to be nearly double that of the iPhone 5s after five weeks on the market, based on usage data provided by Fiksu. Despite severe supply constraints, adoption of the iPhone 6 Plus is running ahead of iPhone 5c.

U.S. wireless carriers have highlighted unprecedented demand for the new iPhones. Verizon has its highest backlog of iPhone orders ever, according to CFO Fran Shammo. AT&T also reported record smartphone subscriber additions and upgrades last quarter, and noted that supply issues constrained growth. These data points suggest very strong uptake of Apple's new iPhones.

iPhone demand still unknown
On Apple's earnings call, CEO Tim Cook confirmed the strong demand for both new iPhones. He characterized iPhone supply and demand as "not on the same planet." As a result, Apple can't accurately forecast demand yet -- it is selling every iPhone it can make, and it's hard to know how many more it could sell if it had more supply.

Thus, there is a lot of uncertainty at Apple about iPhone demand. Apple can estimate its supply a little bit better, but it will obviously try to ramp up production rates as fast as possible. Apple knows how many iPhones it shipped in the last few weeks, and it knows roughly how many it can ship in the next month, but it has less certainty about the last month of the quarter.

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Apple is still trying to figure out just how strong iPhone demand is right now. Photo: Apple.

This uncertainty was not reflected in Apple's guidance. As in other quarters with major product launches, Apple provided a $3 billion range for its revenue guidance. If Apple's forecast was conservative (recall that revenue has always been above the midpoint of the guidance range), the best-case revenue scenario could be well above $66.5 billion (the high end of guidance).

Wait and see
Demand for the iPhone 6 and iPhone 6 Plus is strong -- probably strong enough to push Apple's revenue up to $70 billion this quarter, all things being equal. However, it's not clear yet whether Apple will have enough supply to meet all of this demand by the end of December. The strong U.S. dollar is also cutting into international revenue, creating an additional headwind.

Ultimately, investors will have to wait and see whether Apple can overcome these two barriers to post its first $70 billion revenue quarter this fall. Yet even if the company falls short of this milestone, it is likely to get much closer than its guidance implies.

Furthermore, insofar as iPhone supply constraints hold down revenue this quarter, the pent-up demand should drive another strong performance in the following quarter ending in March 2015. Either way, Apple investors will come out ahead.

Adam Levine-Weinberg is long January 2016 $80 calls on Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.