Apple: What We Think of the Stock After Earnings

Key Morningstar Metrics for Apple

• Fair Value Estimate
  : USD 285
• Morningstar Rating
  : ★★
• Morningstar Economic Moat Rating
  : Wide
• Morningstar Uncertainty Rating
  : Medium

What We Thought of Apple’s Earnings

Apple AAPL‘s June-quarter results were strong, highlighted by total revenue rising 16% year over year to USD 109.4 billion and 22% year-over-year growth in iPhone revenue. September guidance is weighed down by a combination of supply constraints, memory inflation, and foreign exchange headwinds.

Why it matters: The iPhone 17 continues to benefit from immense demand, as does the MacBook Neo. We expect supply constraints and memory inflation to weigh on results through 2027, but we expect Apple’s recent pricing increases to help mitigate the impact.

• We model a growth headwind of about 3% in the September quarter and fiscal 2027 from supply constraints, primarily due to tight global chip supply amid demand for artificial intelligence. Demand remains strong, and we still expect Apple to grow nicely despite these constraints.
• Adjusting for tariff refunds, product gross margin dipped 230 basis points sequentially in June due to memory inflation, and we expect another 250-basis-point dip in September. We expect pricing to limit the impact of memory beyond September, but still model a 200-basis-point headwind in 2027.

The bottom line: We trim our fair value estimate for wide-moat Apple to USD 285 from USD 290 to reflect short-term supply constraints and memory cost pressures. Shares are down 7% in the aftermarket, but remain lightly overvalued to us.

• We still expect double-digit growth in 2027, led by pricing increases. June prices rose by 15% to 25%, and there may be another hike in the fall with new products. These help to partially offset memory inflation, while Apple shares some of the pain on gross margin.
• In 2028, we expect relief to both supply constraints and profitability via expanding supply, particularly for memory. Longer-term, we believe Apple’s price increases can benefit margins once memory prices come back to earth.