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Financial data on TradingView ↗Reported statements, ratios and ownership, alongside this research.
Apple designs and sells iPhone, Mac, iPad, wearables and home devices, and sells services such as the App Store, iCloud, subscriptions, AppleCare, payments and advertising. Customers are mainly consumers, plus businesses, schools and governments, reached through Apple stores and carriers or resellers. [S2]
Device sales, led by iPhone at about 54% of revenue in the nine months to June 2026, plus Services at about 25%, which earns much higher gross margins from the same customers. [S1][S2]
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Start with the business evidence, then follow the assumptions through to scenarios and valuation.
Financial data on TradingView ↗Reported statements, ratios and ownership, alongside this research.
Valuation and assumptionsApple is competitively stronger than at any point in years, gaining share while memory costs push rivals out of the entry tier. Its price, however, implies roughly a 6% annual return on the base case with the 10-year Treasury near 5%.
A valuation model that works backward from a share price to find combinations of growth, margins, and other assumptions consistent with that price.
In this report: It shows the price needs either about 13.6% annual revenue growth at an 8.9% discount rate or acceptance of a roughly 6% return on realistic growth.
Multiple compression: with no change in the business, a return to historical multiples would cut the price by a quarter or more.
Apple sells premium devices, led by iPhone at about 54% of recent revenue, then earns high-margin Services revenue from an installed base above 2.5 billion devices. Services earned about a 75% gross margin in FY2025 versus about 37% for products.
Earning recurring revenue from customers who already own a company's devices, such as subscriptions, app commissions and licensing fees, after the initial hardware sale.
In this report: Apple's 2.5bn+ active devices generate Services revenue at about a 75% gross margin, roughly double the margin on hardware.
At an 8.9% cost of capital the price requires about 13.6% revenue growth for ten years. Read the other way, the base case implies about a 5.9% return and the bull case about 6.9%.
A valuation model that works backward from a share price to find combinations of growth, margins, and other assumptions consistent with that price.
In this report: It shows the price needs either about 13.6% annual revenue growth at an 8.9% discount rate or acceptance of a roughly 6% return on realistic growth.
The weighted average required return of a company's debt and equity providers, used to discount cash flows to the firm.
In this report: Apple has almost no debt, so WACC is essentially its cost of equity; each 50bp change moves value by about $13 to $15 per share, more than any operating assumption.
Great business, unattractive price. Base value is about $166 and probability-weighted value about $162 versus $338.98. The disagreement with the market is mostly about the required return, not next year's earnings.
The weighted average required return of a company's debt and equity providers, used to discount cash flows to the firm.
In this report: Apple has almost no debt, so WACC is essentially its cost of equity; each 50bp change moves value by about $13 to $15 per share, more than any operating assumption.
iPhone revenue after the FY2026 upgrade wave: 100bp of annual growth moves value about $12 per share, and one strong year is thin evidence for the next five.
Services take rate: losing Google's default payments would cut about $19 per share; zero-fee US app link-outs are already in force.
The share of a transaction's value that a platform keeps as its fee or commission.
In this report: US courts currently bar Apple from charging on purchases users make through outside links, and Apple has proposed 15% and 5% fees; the outcome sets how much App Store spending Apple keeps.
Gross margin under memory inflation: underlying margin is guided down about 160bp from Q3 to Q4 FY2026.
The sensitivity of operating profit to changes in revenue when some operating costs are fixed.
In this report: Operating expenses grew about 23% in Q3 FY2026; if revenue growth slows while AI spending continues, margins fall faster than revenue.
The upgrade wave borrowed future demand, memory stays expensive, and courts cut Google payments and link-out fees, pushing operating margin below 30%.
The wave completes normally, memory stabilizes in 2027 at higher prices that Apple partly passes through, and Services slows gradually as regulation trims commissions.
AI features and the foldable shorten upgrade cycles, the 2026 share gain sticks, and paid AI tiers add a new high-margin Services layer.
Apple does not disclose iPhone units, ASPs, App Store commission revenue or Google payments, so these are reconstructed. The FY2026 proxy was not reviewed, so incentive design is unverified. The source of a $12bn rise in intangible assets in FY2026 is not identified in the filing excerpt. Forward tariff costs under Section 301 and 232 could not be sized. Competitor margins and a precise FY2027 consensus EPS were not retrieved. Beta and equity risk premium are assumptions. expected_return_low is the base case including an assumed de-rating to 30x FCF over five years; expected_return_high is the base case from fundamentals alone.
These model scenarios depend on their inputs. Review the assumptions and supporting evidence alongside the implied values.
earnings multiple v2 · as of 2026-10-18
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