Tempered expectations for Apple earnings

After Google and Microsoft reported results that disappointed expectations, sending both stocks lower, investors are turning their attention to another tech giant, and asking whether Apple will beat or miss.

So far this year Apple shares are down about 20 percent, and Tuesday's earnings news is sure to send the stock moving in one direction or the other. Wall Street analysts expect Apple's revenue to be flat with the year-ago quarter, while earnings per share are projected to drop 22 percent, to $7.31.

Even more important than quarterly numbers is the product cycle, said Societe Generale analyst Andy Perkins: "We will be looking for signs of new products such as the low-priced handset … and possibly the iWatch."

Beyond Apple's future plans, the big question: How are iPhone and iPad sales, and how is the tech giant managing inventory? Wall Street consensus is that the company will ship 26.5 million iPhones in the second quarter.

But Morgan Stanley analyst Katy Huberty is more bullish, looking for the company to ship at least 29 million. Huberty cites sales data for Apple using Web search analysis via Google trends, and the work of Morgan Stanley's telecom analyst Simon Flannery, who increased his iPhone activation forecast for the second quarter by 20 percent.

(Read more: Why investors should look past Apple's 'horrendous' earnings)

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There's been a lot of attention on Verizon's recent second-quarter report, and what that could indicate about Apple. Goldman Sachs' Bill Shoppe points out that iPhones were just over half of all Verizon smartphone activations in the quarter, a 41 percent year-over-year increase.

Shoppe says that while it's encouraging that the iPhone is showing upside at Verizon, U.S. carriers sales are not necessarily representative of overall performance.

"We continue to believe that Apple needs to launch a series of successful new iOS products this fall for the stock to completely be in its recovery," Shoppe said. "And we expect it will introduce a refreshed iPhone and a low-cost model this fall."

(Read more: Why Apple is still the king of design and innovation)

Another issue facing Apple is tough iPad comparisons with last year, especially when it comes to margins.

Telsey Advisory Group's Tom Forte projects Apple's operating margin will contract 800 basis points to 25 percent, because of gross margin pressure from "refreshing its product line" late last year and a mix shift toward lower-margin iPad minis, among other things.

—By CNBC's Julia Boorstin. Follow her on Twitter: @JBoorstin