Ahead of Earnings, Is Apple Stock a Buy, a Sell, or Fairly Valued?

Apple is set to release its fiscal second-quarter 2026 earnings report on April 30. Here’s Morningstar’s take on what to look for in Apple’s earnings and the outlook for its stock.

Key Morningstar Metrics for Apple

• Fair Value Estimate
  : USD 260.00
• Morningstar Rating
  : ★★★
• Morningstar Economic Moat Rating
  : Wide
• Morningstar Uncertainty Rating
  : Medium

Apple Earnings Release Date

• Thursday, April 30, after the close of trading

What to Watch for in Apple’s Q2 Earnings

• The iPhone is Apple’s biggest driver. We expect another quarter of strong, double-digit year-over-year growth following a blowout December quarter. We credit this to strong uptake for the iPhone 17 family and a pent-up refresh cycle following covid-era purchases.
• Growth in China is a big trend to watch. Growth was tremendous in the December quarter after a couple of years of declines. Apple’s ability to resume growth in China would be highly positive for investors.
• Facing tariffs and rising memory prices, Apple’s gross margin remains extremely impressive. Management guided to record gross margin in the March quarter, despite skyrocketing memory prices. We credit the firm’s supply chain management and relatively low mix of memory in the iPhone bill of materials for keeping margins high despite cost inflation.
• We like the choice of John Ternus to succeed Tim Cook as CEO. We expect Ternus to focus on device innovation in the age of AI. Broadly, we believe he’ll highlight strategy continuity, with a continued focus on services growth, semiconductor integration, and margin expansion.

Fair Value Estimate for Apple Stock

With its 3-star rating, we believe Apple’s stock is fairly valued compared with our long-term fair value estimate of USD 260 per share, which implies a fiscal 2026 enterprise value/revenue multiple of 8 times, and a fiscal 2026 free cash flow yield of 3%. We project 8% compound annual revenue growth for Apple through fiscal 2030, with the iPhone as the biggest contributor at 7% revenue growth over the next five years.

Read more about Apple’s fair value estimate.

Economic Moat Rating

We assign Apple a wide economic moat rating, stemming from customer switching costs, intangible assets such as intellectual property, and a network effect from its iOS ecosystem. Apple’s moat is reinforced with a network effect between its large, committed user base and expansive ecosystem of application developers. On top of 45% gross margins, which are impressive for a consumer hardware provider, Apple’s asset-light model with outsourced manufacturing generates robust returns on invested capital, to the tune of roughly 50%. In our view, Apple’s sticky ecosystem and phenomenal engineering capabilities will enable it to continue earning strong economic profits over the next 20 years.

Read more about Apple’s economic moat.

Financial Strength

Apple has a terrific balance sheet, with a net cash position of USD 34 billion as of September 2025. Management has laid out a goal to become cash neutral eventually, with no set timetable; we model it to hit this target near the end of the decade. Apple supplements its strong balance sheet with impressive cash flow. Over the last five years, the firm has averaged more than USD 100 billion in free cash flow generation annually, and we forecast significant free cash flow growth over our forecast. We expect Apple to focus on using this cash flow to return capital to shareholders while increasing its net leverage over the medium term.

Read more about Apple’s financial strength.

Risk and Uncertainty

We assign Apple a Medium Uncertainty Rating. We see the firm’s greatest risk as its reliance on consumer spending, for which there is great competition and cyclicality. Additionally, we note the constant risk of disruption from a new device and geopolitical risks arising from Apple’s supply chain, which is heavily reliant on production in China and Taiwan.

Apple also faces regulatory scrutiny. The European Union has enacted regulations on the company, and there are ongoing antitrust cases in the United States that could affect Apple’s walled garden ecosystem. All these help to chip away at the firm’s differentiation, but we believe the firm is offsetting these by adding new stick points for customers, like new services and devices.

Read more about Apple’s risk and uncertainty.

AAPL Bulls Say

• Apple offers an expansive ecosystem of tightly integrated hardware, software, and services, which locks in customers and generates strong profitability.
• We like Apple’s move to in-house chip development, which we think has accelerated its product development and increased its differentiation.
• Apple has a stellar balance sheet and sends great amounts of cash flow back to shareholders.

AAPL Bears Say

• Apple is prone to consumer spending and preferences, which creates cyclicality and opens the firm up to disruption.
• Apple’s supply chain is highly concentrated in China and Taiwan, which opens up the firm to geopolitical risk. Attempts to diversify into other regions may pressure profitability or efficiency.
• Regulators have a keen eye on Apple, and recent regulations have chipped away at parts of Apple’s sticky ecosystem.

This article was compiled by Jillian Moore.