Evolve · Equity Research Snapshot
Apple Inc. (NASDAQ: AAPL)
Consumer Electronics & Services · Fiscal year ends September · Q3 FY2026 reported July 30, 2026 · Q4 FY2026 due Nov 2, 2026
$342.96+0.50%
Consensus: Moderate Buy
26 Buy · 14 Hold · 2 Sell
Avg PT $329 (−4.0%) · stock is above the Street
Next earnings: Nov 2, 2026 · Ternus's first call
TL;DR — Priced for perfection, now with a $5T price tag
Up 11% since the July snapshot; the Street's average target is below the price
Apple's June quarter was its strongest ever: Q3 FY2026 revenue of $109.4B (+16% YoY, vs $108.65B expected), EPS of $2.02 (+29%), a record $34.4B of operating cash flow and gross margin of 50.1%. Read the margin carefully — roughly 2 points of it was tariff refunds; ex-refunds it was 48.1%, down from 49.3% in March, and management guided the September quarter to 47–48% as memory costs bite ("a 100-year flood on memory pricing," per Tim Cook on his final call). Revenue was guided to +9–11% when the Street expected ~12%, with supply constraints that "increase significantly" cited alongside memory. Services missed ($30.7B vs ~$31.2B) and grew 12%, its slowest in two years; Greater China ($18.8B) and iPad (−6%) also fell short of estimates. Since then: John Ternus took over as CEO on Sep 1, Gemini-powered Siri shipped in iOS 27 on Sep 14 (not in the EU), iPhone 18 Pro launched Sep 18, the $1,999 iPhone Duo foldable goes on sale Oct 23, and the stock closed above a $5T market cap for the first time. At 39× trailing earnings the bull case is the AI upgrade cycle finally arriving; the bear case is that iPhone 18 Pro component orders were reportedly cut 15% and the multiple leaves no room for a soft holiday quarter.
Q3 FY26 Revenue
$109.4B
+16.4% YoY · beat $108.65B est.
Q3 FY26 EPS
$2.02
+29% · incl. $0.11 tariff refund
Gross Margin
50.1%
48.1% ex-refunds · guide 47–48%
FY25 Revenue
$416.2B
+6.4% YoY · TTM now $466.9B
01 / 02
Revenue mix & margin structure
Q3 FY2026 · Revenue by segment
iPhone still runs the show — Mac is the surprise
$109.4B total · Services slipped to 28% of mix as iPhone (+22%) and Mac (+29%) outgrew it
iPhone $54.3B · 49.6% · +22%
Services $30.7B · 28.1% · +12%
Mac $10.4B · 9.5% · +29%
Wearables, Home & Acc. $7.9B · 7.2% · +6%
iPad $6.2B · 5.7% · −6%
FY2025 · Prior annual · $416.2B
iPhone $209.6B · 50.4% · +4%
Services $109.2B · 26.2% · +14%
Wearables, Home & Acc. $35.7B · 8.6% · −4%
Mac $33.7B · 8.1% · +12%
iPad $28.0B · 6.7% · +5%
Products $307.0B (73.8%) · Services $109.2B (26.2%). Services' share has slipped in FY26 only because iPhone and Mac are growing faster, not because Services is shrinking.
Products vs Services · Gross margin
Products margin jumped — but it was borrowed
Services holds ~76% gross margin. Products printed 40.1%, up 560 bps YoY — about 2 points of the blended figure came from one-time tariff refunds.
Read: Blended GM printed +360 bps YoY, but ~200 bps was tariff refunds. The underlying 48.1% is down 120 bps from March. Guide for the September quarter: 47–48% including ~1 point of further refunds — so ~46–47% clean. The CFO said memory costs explain more than all of the decline. Services GM was flat at 75.6%. Rest of the Q4 guide: opex $19.1–19.4B, tax rate ~16.5%, FX a ~2.5-point headwind to growth.
03
What's already in the price
Current setup · $342.96 · 39× TTM P/E · +40% over 12 months · $5.0T market cap
The market is paying for the AI cycle to show up in the holiday quarter
- A clean iPhone 18 cycle on top of a record iPhone 17 base iPhone grew 22% in Q3 against an already-strong compare. Apple guided the September quarter to +9–11% when the Street was at ~12%; consensus has since settled at ~$113B, the top of the range, and the Street's FY26 revenue sits at ~$478B (+15%). The multiple assumes iPhone 18 Pro (Sep 18) and the $1,999 iPhone Duo (Oct 23) extend the run, not reverse it.
- Gemini-powered Siri converting into upgrades and Services The new Siri shipped with iOS 27 on Sep 14 — on time, which the July multiple only hoped for. What's now priced is monetization: Wedbush's $15B incremental Services opportunity and a "$75/share of AI value" claim are in the Street-high $400 targets.
- Memory costs as a one-year problem, not a reset Guide of 47–48% GM is priced as the trough. TrendForce has memory at ~34% of iPhone 18 Pro bill of materials (from ~10%) and rising past 40% in 1H27. Consensus EPS is $8.82 for FY26 and $9.58 for FY27 (forward P/E 38.9× and 35.8×, PEG ~2.7), and the FY27 number has already drifted down ~1% in 90 days. If 46–47% clean becomes the new normal, it has further to fall.
- Services re-accelerating from 12% Q3 Services growth of 12.1% was the slowest in two years and a miss. The Street still models mid-teens — on 1.5B paid subscriptions and price increases — despite the US App Store link-out ruling, EU DMA enforcement and the take-rate debate.
- $100B buyback as a floor $62B repurchased in the first nine months of FY26 ($25.8B in Q3 alone). At a $5T cap that's ~1.6%/yr of share count — a tailwind, not a catalyst, and already in every model.
- A seamless Ternus transition Nov 2 is Ternus's first call as CEO and the first full quarter under him. The stock has treated the handover as a non-event; a hardware CEO guiding a memory-cost margin squeeze is where that assumption gets tested.
04 / 05
Bull & bear cases
Reasons the stock could go higher
The bull case
- Siri AI is shipping, and it's the upgrade trigger 2.5B+ active devices. The Gemini-powered Siri requires newer silicon, which turns an installed-base refresh into an AI-feature decision. Two product cycles (iPhone 18 + Duo) land inside one holiday quarter for the first time.
- Mac is a real growth engine again +29% YoY in Q3 to $10.4B — the biggest beat of the quarter (~$8.7B expected). The $599 MacBook Neo and education wins are showing up in the numbers, not just the narrative.
- Price increases are sticking Apple raised Mac, iPad, Apple TV and Vision Pro prices in June and the TV box doubled to $300 in October. iPhone 18 Pro is priced 10–20% higher. If units hold, pricing offsets the memory squeeze faster than consensus models.
- Greater China is growing 22% again $18.8B in Q3, up from $15.4B, with the best Mac quarter ever in the region; Europe also +22%. It did miss the ~$19.6B consensus — but the geographic story that was a bear point in 2025 is a tailwind in FY26.
- Record cash generation funds everything $34.4B operating cash flow and $31.9B FCF in a single quarter (+31% YoY). $147B of cash and securities against $84B of debt. The buyback can absorb a soft quarter without any change in pace.
- HomeView opens a new category The $299 Siri-first smart-home hub ships Nov 13. Small in revenue, large as proof that the new Siri is a platform, not a feature — the thing the AI premium has been waiting for.
Reasons the stock could drop · risks
The bear case
- Memory is a structural margin reset iPhone 18 Pro costs ~38% more to build (TrendForce). Clean gross margin went 49.3% → 48.1% → guided ~46–47% in three quarters. Every 100 bps is ~$4.7B of annual gross profit.
- Multiple compression at 39× P/E A re-rate to the 5-year average of ~28× on trailing EPS of $8.76 is ~$245 — a 28% drawdown with no earnings miss. The Street's own average target ($329) is below the stock.
- Supply caps on iPhone, Mac and iPad Management said constraints "increase significantly" in the September quarter with little flexibility — the reason the guide (+9–11%) landed below the Street's ~12%. Cook framed it as "a demand forecast issue," but if the caps persist into the holiday quarter, FY27 numbers come down.
- iPhone 18 Pro order cuts Reports that Apple told suppliers to trim October component orders for the 18 Pro / Pro Max by at least 15%. BofA counters that delivery times are shorter than last year — but shorter waits can mean better supply or weaker demand.
- Services deceleration is real 12.1% growth (from 14–16%) and a ~$0.5B miss in Q3, with FX, the US App Store link-out ruling and EU DMA enforcement all cited as drags. Services is 28% of revenue and ~42% of gross profit; if it compounds at 10% rather than 15%, the mix-shift margin story stalls.
- Siri runs on a rented model Apple reportedly pays Google ~$1B/yr for a custom 1.2T-parameter Gemini model, and the new Siri is excluded from the EU. Jefferies (Underperform, $264) and Barclays (Underweight, $253) both argue Apple is an AI laggard paying for someone else's moat.
- First-quarter CEO risk Ternus inherits the Gemini deal, the memory squeeze and a $5T valuation in the same quarter, and insiders have been net sellers (~$93M over three months). Any guide below the 9–11% range on Nov 2 will be read as the new CEO resetting expectations.
- Tariffs cut both ways Q3 EPS got $0.11 and ~2 points of GM from tariff refunds. That is non-recurring, and the underlying tariff regime on China-assembled hardware remains a live policy variable.
06
Recent analyst ratings & price targets
Consensus PT $329 (S&P Global, 44 analysts) · MarketBeat $340 · spot $342.96 is above both
The stock has run past the Street — only the $400 camp still sees upside
Range spans $215 (Street low) to $405 (Street high). Named targets below run $253 (Barclays) to $400 (TD Cowen, Redburn, Wedbush). Distribution per S&P Global: 6 strong buy · 19 buy · 13 hold · 3 sell · 3 strong sell.
| Firm | Analyst | Rating | Price Target | Implied | Date |
|---|---|---|---|---|---|
| Wedbush | Dan Ives | $400 | +16.6% | Oct 14, 2026 · reiterated | |
| TD Cowen | Krish Sankar | $400 | +16.6% | Sep 10, 2026 | |
| Rothschild & Co Redburn | Timm Schulze-Melander | $400 | +16.6% | Aug 17, 2026 · upgrade | |
| Evercore ISI | Amit Daryanani | $380 | +10.8% | Oct 9, 2026 | |
| Bank of America | Wamsi Mohan | $370 | +7.9% | Oct 12, 2026 | |
| HSBC | Nicolas Cote-Colisson | $366 | +6.7% | Sep 8, 2026 | |
| Citi | Atif Malik | $365 | +6.4% | Oct 8, 2026 | |
| JPMorgan | Samik Chatterjee | $360 | +5.0% | Oct 12, 2026 · from $340 | |
| Morgan Stanley | Erik Woodring | $355 | +3.5% | Oct 1, 2026 · from $360 | |
| Daiwa | — | $335 | −2.3% | Aug 11, 2026 | |
| Deutsche Bank | — | — | — | Aug 17, 2026 · downgraded from Buy | |
| Moffett Nathanson | — | $304 | −11.4% | Sep 8, 2026 · from $270 | |
| Rosenblatt | Barton Crockett | $303 | −11.7% | Sep 10, 2026 | |
| Phillip Securities | — | $300 | −12.5% | Sep 14, 2026 · from $290 | |
| DA Davidson | Gil Luria | $270 | −21.3% | Sep 2, 2026 | |
| Jefferies | Edison Lee | $264 | −23.0% | Sep 9, 2026 · downgraded Aug 10 | |
| Barclays | Tim Long | $253 | −26.2% | Jun 9, 2026 |
Dates are the most recent published action per firm. Implied return vs. $342.96 close on Oct 14, 2026. Rating counts (26 Buy / 14 Hold / 2 Sell) per MarketBeat, 42 analysts. Ratings normalized where firms use bespoke labels.
07
Revenue trend — FY2021 to FY2025
Annual revenue · fiscal years ended late September
Post-COVID plateau, then a fresh leg up in FY25 — and FY26 is tracking +13%
FY2023 was the trough. FY2025 broke the range on iPhone strength and Services acceleration; the first nine months of FY26 are +16% on top of that.
4-year CAGR (FY21→FY25): +3.3%. TTM revenue as of Q3 FY26: $466.9B (+14.3% YoY). Nine months FY26: $364.4B (+16.2%). FY26 closes Sep 26; Apple's guide implies ~$476–478B for the full year.
08
Free cash flow trend
Annual free cash flow · fiscal years
The cash engine is accelerating — $110B in nine months of FY26
FY21–FY25 averaged ~$102B/yr. FY26 is on a different trajectory: nine-month FCF is already $110.2B, with the seasonally strongest quarter still to come.
FY25 FCF/Revenue = 23.7% — the FY25 dip was operating cash flow falling ~6% to $111.5B on a large one-time tax payment tied to the EU state-aid case, plus higher capex. TTM FCF to Jun 27, 2026: $136.7B (29.3% of revenue), a record. Nine months FY26: OCF $117.0B, capex $6.8B, FCF $110.2B (30.2% of revenue) — already above every full year on the chart except FY22. Q3 FY26 alone: $31.9B, +31% YoY.
09
Key metrics summary
Market cap
$5.01T
2nd company ever above $5T
P/E (TTM)
39.2×
vs 5-yr avg ~28× · fwd 35×
Dividend yield
0.32%
$1.08 annualized
52-week range
$243–$348
+41% off low · ATH Oct 13
TTM revenue
$466.9B
+14.3% · to Jun 27, 2026
TTM net income
$128.9B
27.6% net margin
TTM free cash flow
$136.7B
OCF $146.7B · FCF margin 29.3%
Forward P/E · EPS est.
38.9× · 35.8×
FY26E $8.82 · FY27E $9.58 · PEG ~2.7
Financial snapshot
The numbers that matter
| Metric | Q3 FY2026 | Q3 FY2025 | YoY | FY2025 | FY2024 |
|---|---|---|---|---|---|
| Revenue | $109.4B | $94.0B | +16.4% | $416.2B | $391.0B |
| iPhone revenue | $54.3B | $44.6B | +21.7% | — | — |
| Services revenue | $30.7B | $27.4B | +12.1% | — | — |
| Mac revenue | $10.4B | $8.0B | +28.7% | — | — |
| iPad revenue | $6.2B | $6.6B | −5.9% | — | — |
| Gross margin | 50.1% | 46.5% | +360 bps* | 46.9% | 46.2% |
| Operating margin | 32.6% | 30.0% | +260 bps | 32.0% | 31.5% |
| Net income | $29.8B | $23.4B | +27.1% | $112.0B | $93.7B |
| Diluted EPS | $2.02 | $1.57 | +28.7% | $7.46 | $6.08 |
| Operating cash flow | $34.4B | $27.9B | +23.3% | $111.5B | $118.3B |
| Free cash flow | $31.9B | $24.4B | +30.8% | $98.8B | $108.8B |
| Cash + marketable securities | $147B | — | — | $132B | — |
| Total debt (incl. commercial paper) | $84B | — | — | $99B | — |
| Shareholder returns (qtr) | $33B | $28B | +20% | — | — |
| Installed base of active devices | 2.5B+ | 2.35B | All-time high | — | — |
* Includes ~200 bps of one-time tariff refunds; underlying gross margin was ~48.1%. FY2025 balance-sheet figures are as of Sep 27, 2025. Shareholder returns = buybacks + dividends and equivalents, per the earnings call.
Numbers ledger. Q3 FY2026 figures (quarter ended June 27, 2026) from Apple's 8-K exhibit 99.1 and 10-Q filed July 30, 2026 (SEC.gov); segment, geographic, balance-sheet and nine-month cash-flow lines taken directly from the filing; quarterly cash-flow split via StockAnalysis. Guidance, tariff-refund impact, capital return and installed base from the Q3 FY26 earnings call (July 30, 2026). FY2021–FY2025 annual revenue and FCF unchanged from the July edition; two July figures corrected here — FY2025 diluted EPS is $7.46 (not $7.28) and FY2025 operating cash flow is $111.5B (not $118.3B). FY2025 segment split from the FY2025 10-K. TTM, forward-multiple and consensus-estimate figures via StockAnalysis (S&P Global) and FactSet-sourced coverage, Oct 2026. Analyst ratings and targets from S&P Global via StockAnalysis and from MarketBeat (as of Oct 12–14, 2026); Wedbush, Jefferies and Barclays positions cross-checked against Yahoo Finance, Investing.com and price-target.com. Price ($342.96), market cap, P/E and 52-week range from Yahoo Finance at the Oct 14, 2026 close. Product and news items (iPhone 18 Pro pricing and order cuts, iPhone Duo, HomeView, iOS 27/Siri, Ternus transition) from Apple Newsroom, TrendForce, MacRumors, CNBC and Benzinga, Aug–Oct 2026. Published Oct 14, 2026. Successor to the July 2026 edition, which is preserved unchanged.
Not investment advice. Personal-use dashboard. Verify every number before publishing.