In October, Cook said he thought Apple could make a comeback.
"Looking forward, the response to the iPhone 7 and 7 Plus has been very positive," Cook said in the company's last earnings call. "It's very hard to gauge demand, as you know, when you're selling everything you're making. So we'll find out more through the quarter, but we're confident enough to give you guys guidance that we're returning to growth this quarter, which obviously feels very good for us."
Analysts polled by Thomson Reuters seem to agree with Cook, at least in part: They expect adjusted earnings of $3.22 a share in the first fiscal quarter, down 1.8 percent from a year ago, on revenue of $77.38 billion, up 2 percent from a year ago, barring any revisions.
Shares of Apple have risen nearly 7 percent over the past 3 months, compared to Alphabet, which has risen about half a percent, and Facebook, which has fallen less than half a percent over the same period.
Much hinges on sales of Apple's new flagship phone, the iPhone 7, during the holiday shopping season. Analysts surveyed by FactSet expect that 77 million total iPhone units shipped during the quarter, up from 75 million in the year-ago period.
The iPhone's performance in China will be especially crucial, after Cook said last quarter he was "very bullish" on the Asian nation.
While Drexel Hamilton analyst Brian White sees Apple as "one of the most underappreciated stocks in the world," he expects Greater China revenue to fall by 20 percent or 30 percent, year over year, in the first quarter.
The company's software and services, like Apple Music and the App Store, could also help supplement iPhone sales. Services revenue grew 24 percent to an all-time quarterly record of $6.3 billion, the company said last quarter, and the App Store hit a record on New Year's Day.
In absolute value, Apple's revenue stream from services is already about the size of Facebook, according to Thomas Husson, vice president, principal analyst at Forrester. (Facebook reported revenue of about $7 billion in the third quarter).
Going forward, Apple's software could become a key differentiating factor for its hardware product, according to Stifel analyst Aaron Rakers, especially for the upcoming tenth anniversary iPhone, expected to debut in September.
"We think Apple's possible integration of 3-D sensing in the next-gen iPhones could be considered a killer app and provide renewed confidence in Apple's innovation engine," Rakers wrote in a research note.
Gene Munster of Loup Ventures — formerly a top Apple analyst on Wall Street — also has placed bets that 3-D software will be key for Apple.
"The transition to Services is important as new platforms like AR and VR emerge and transform Apple's existing mobile device businesses," Munster wrote in a research note.
The next major iPhone cycle is highly anticipated, thanks to the more than 315 million users that will be on an iPhone that is more than 2 years old, according to Piper Jaffray analyst Michael Olson.
"The pessimism among investors is largely based on perception that potential iPhone 7 buyers are holding out for the 10th anniversary device in Sept (iPhone X)," Olson wrote. "Our survey of 1,000 U.S. iPhone owners suggests most are not aware of the potential for a 10th anniversary device with more significant upgrades later this year."
For a notoriously secretive company like Apple, earnings are also a rare chance for Wall Street to hear Cook's vision for the company. With a new federal administration at America's helm, Apple's forecasts of future tax benefits "will be an investor interest on the conference call," Raker wrote.
Feedback on devices like AirPods, new MacBooks, Apple Watch, and research and development are increasingly pushing investors in one of two directions, and Tuesday's earnings will help drive dueling narratives, wrote UBS analyst Steven Milunovich.
Narrative no. 1, Milunovich said, is that "the best days of the company are behind it," and that "projects such as Siri and the car appear to be failures." Narrative no. 2 — the one that Milunovich said he favors — is that Apple has cutting-edge technology but "is waiting for the market to mature to a point where entering with a new product makes sense."