Key Morningstar Metrics for Apple

• Fair Value Estimate

  : $270

• Morningstar Rating

  : ★★★

• Morningstar Economic Moat Rating

  : Wide

• Morningstar Uncertainty Rating

  : Medium

What We Thought of Apple’s Earnings

Apple’s AAPL March-quarter results beat the top ends of guidance. Revenue rose 17% year over year to $111 billion, led by iPhone revenue rising 22%. Gross margin of 49.3% was an all-time record. Management guided to similarly strong growth in the June quarter, with slight margin compression.

Why it matters: The iPhone’s growth, led by the iPhone 17, continues to impress, particularly in China. We also appreciate strong profitability amid steep memory price inflation. We believe high growth will continue through the year, led by strong iPhone 17 uptake and a pent-up refresh cycle.

• The iPhone 17 cycle is the strongest since 2021, and it isn’t driven by artificial intelligence. We forecast iPhone growth above 20% for the year, driven by what Apple does best: high-quality hardware (camera, display, processor), new form factors, and an ever-compelling software ecosystem.
• Against skyrocketing memory prices, we credit Apple for raising base iPhone storage capacities for a margin cushion and for excellent supply chain management through long-term contracts. Apple expects stronger memory cost headwinds in future quarters, but these remain a low impact to us.

The bottom line: We raise our fair value estimate for wide-moat Apple to $270 from $260, as we increase our 2026 growth forecast to reflect an even stronger iPhone 17 cycle. Shares rose 2% after hours on strong guidance, and we view the stock as fairly valued.

• Our forecast is led by iPhone as the majority of sales. After a superb 2026, we expect a return to mid-single-digit growth long term. We expect services to complement iPhone revenue, rising in the double digits through 2030, led by Google’s Search payments and App Store revenue.
• We model memory costs compressing margins by 100 basis points in the June quarter, and further in September. Still, gross margin of 48% is highly positive. We believe Apple can use long-term supply contracts to avoid the brunt of memory inflation, and high-margin services help pad profits.