Apple recently hit an all-time high. Today the stock is trading at a P/E of 35. The P/E ratio is the current share price P divided by the last four quarters’ net earnings per share E. But we also have a pretty good idea of the earnings for the next quarter, ending June (now almost half-way completed). The guidance very clearly suggests that on a one Quarter forward basis the P/E ratio is 34.
I’ve maintained for at least 15 years that a reasonable multiple for Apple is 35. This was mainly because other large cap technology companies were also trading around that number. While at this ratio, if a company is growing at 22% it means that an investor will make their money back in about 10 years. Thereafter all free cash flows will go entirely to the investor’s pocket. That seems a reasonable return. It’s not a particularly risky bet to assume 20% growth for 10 years if you look at (a) history and (b) how many people in the world have not yet started using Apple products and (c) assess how well management is doing their job.
So by this measure, Apple seems to be reasonably priced. Historically it has not been reasonably priced but that is due to the disconnect between understanding the business and falling for the usual false tropes. The following graph shows the share price and where it fell between the bands of Earnings multiples. The grey areas represent periods of significant share price decline.
But much of the volatility of the stock is also due to overall sentiment collapse. That has happened on many occasions, most notably the 2008 financial crisis and “great recession.” (Another was the Covid crisis.) In these cases, regardless of underlying strength, the shares were available very cheaply.
Today perhaps we should ask if a bubble is forming due to exuberance around AI which is inflating the market in unsustainable ways.
There are four reasons why the current asset value explosion is different.
First, it is highly concentrated in a handful of names.
2005 S&P 500 top 10
% of the S&P index
2026 S&P 500 top 10
% of the S&P index
Exxon
3.1%
NVDA
7.8%
MSFT
2.5%
GOOG
7.3%
Citigroup
2.2%
AAPL
6.4%
GE
2.0%
MSFT
4.6%
Walmart
1.7%
AMZN
4.4%
BoA
1.6%
Broadcom
3.0%
J&J
1.6%
TSLA
2.4%
Pfizer
1.4%
META
2.3%
Intel
1.3%
Walmart
1.6%
AIG
1.3%
Berkshire Hathaway
1.5%
Total
18.7%
41.3%
Second it is fueled by equity not debt. Third, it involves disproportionate capital expenditure rather than M&A. Fourth it is accompanies by sharply growing revenues (though not as sharp as investment growth.)
In other words, whereas the equity value is growing rapidly, so is income and investment without leverage. This is a low-debt with high income scenario. Previous crises were high income with high debt (2008) or low income with low debt. (Dot Com).
That’s not to say that we have uniform fair equity values. We need to do quite a bit more due diligence to determine the state of the valuations precisely because we have unusual capital allocation strategies.
To cover this topic I’ll will break the analysis into multiple posts. They are:
Why the most common metrics for valuation are insufficient — the problem with the P/E ratio
What are the alternatives that into consideration exceptional cash and capital expenditures — The EV/FCF ratio
How does the P/E ratio differ from EV/FCF and what does it mean if they diverge one way or another
How do the Mag 7 et. al. appear on these Metrics
How to complement snapshots like valuation ratios with the time series of fundamentals
Why payback measures are the ultimate measure of valuation
What are the current payback measures for the Mag 7 et.al.
Compare Apple to its peer group
Finally assess whether a collapse in confidence is imminent
Please return to these pages in the next few days to read these posts.
Fundamentals are breaking; Profits evaporate; Competitors flee; Android logic questioned
Apple’s revenue climbed 22% YoY in Q1 2026, registering the fastest growth among the top five smartphone brands while also hitting a first-quarter record high. Furthermore, the brand led the global smartphone market in terms of shipments for the first time in a first quarter, capturing a 21% share.
Commenting on Apple’s performance, Research Director Jeff Fieldhack said, “Apple’s growth was driven by sustained demand for the base iPhone 17 and iPhone 17 Pro Max, with a stronger mix of these models lifting Apple’s overall ASP by 11% YoY.
Unlike its peers, Apple mostly maintained stable pricing despite rising BOM costs, reflecting its ability to absorb cost pressures and remain insulated from the memory crisis, which helped strengthen its competitive position during the quarter. Regionally, Apple saw broad-based strength, especially across the Asia-Pacific region, driven by subsidies, promotions, and trade-in offers.”
The global smartphone market’s revenue grew 8% YoY in Q1 2026, driven by strong premium demand and pricing adjustments across major OEM portfolios amid rising Bill of Materials.
The average selling price (ASP) climbed 12% YoY to reach $399, supported by contraction in entry-level segments and price hikes across regions.
Apple led the global smartphone market in terms of value, recording its highest-ever first quarter revenue. Apple was the fastest growing brand with revenue up 22% YoY supported by relatively stable pricing compared to peers, despite broad-based price increases across the industry.
Samsung held an 18% revenue share in Q1 2026, with shipments reaching 21% of the total market, supported by portfolio optimization and strong response for the Galaxy S26 series.
The global smartphone market is expected to remain under pressure through 2026, and a substantial recovery is expected only in late 2027.
NB: The average sales price is up to $399 but Apple, with the largest share and fastest growth, reached $908? There's a lot more that does not make sense.
Asymco Bulletin is a digest of all the work we have published for the week ending May 3, 2026.
Editor's Note: Starting next week, we will be sending Asymco Bulletin to Asymco One subscribers only. You will still receive Updates when new posts are published per your notification settings.
In Asymco One's May 1, 2026 Office Hours session, review of Apple's Q2 2026 earnings, segment growth: iPhone at 22%, Services at 16%, iPad at 8%, Mac at 5.7%, and wearables at 5%. Steady, foundational growth of Services, Gross margins reached nearly 50%, R&D spending surged, a shift in Apple's capital return strategy showing perhaps the hand of John Ternus. Guidance suggests 16% revenue growth, 22% EPS growth. Analyst sentiment turned positive post-earnings, with most price targets rising above $310. Apple's evolving identity as an engineering-centric company was the focus of many questions. →
Revenue and EPS consensus, year-ago results and my expectations Yahoo Finance Yahoo Finance’s revenue estimate for Apple in Q2 stems from 31 analysts. As of April 25, the average estimate is $109.69 billion, with a low of $107.08 billion and a high of $115.37 billion. For the earnings per share estimate, 32 analysts put it at an average of $1.95. The low is $1.56 and the high is $2.16. TipRanks TipRanks also does its own analyst polling on Apple’s quarter. In its forecast as of April 19, its consensus is for a revenue of $109.45 billion, with a high of →
TD Cowen: 15% revenue growth, 10% growth guidance → Apple is projected to gain market share in both smartphones and PCs, driven by strong iPhone 17 demand and the new MacBook Neo, with anticipated revenue growth of over 15% in Q3 and positive sentiment ahead of earnings.
Morgan Stanley forecasts fiscal second-quarter EPS of $1.74→ Despite memory pricing pressures, Apple's strong iPhone sales, potential AI and foldable iPhone announcements, solid free cash flow, and favorable market conditions position it for better-than-expected earnings and a possible stock rise to $300 by September.
Is Apple borrowing Samsung’s Market Expansion Strategy?→ Bernstein SocGen maintains optimism on Apple's strategic pricing and ecosystem strength, forecasting EPS growth and potential market share gains, while Samsung faces smartphone profit challenges but thrives in memory.
Separately, it’s been reported that Samsung might see its first operation loss from its phone division, resulting in Apple capturing 100% (or more) of global smartphone profits. Simultaneously, Samsung is seeing huge profit gains from memory, even overtaking Nvidia’s profitability. This is remarkable…
Apple share of the smartphone SoC market grew from 15% to 19% in Q1 → In Q1 2026, global smartphone SoC shipments fell 8%, but Apple thrived in the premium market by leveraging its efficient supply chain and passing costs to consumers, boosting its market share from 15% to 19%.
Google to sell TPU chips as Gemini shows returns → Why pour cash into Nvidia when you can craft your own cutting-edge chips like Google, and then turn that innovation into a lucrative side hustle by selling them to tech giants like Meta and Anthropic?
The Vision Products Group Expanding → Gurman's 2025 dissolution claim clashes with 2026's active Vision Products Group hiring spree. The Vision Products Group posted 14 new senior roles last week.
A transcript of the May 1, 2026 Asymco One Office Hours, recorded one day after Apple's Fiscal Q2 2026 earnings call. Horace Dediu presents his analysis of the quarter and takes questions from Asymco One subscribers. Hosted by Horace Dediu and Farshad Nayeri.
Horace Dediu: So I'll do a short presentation, and then we're going to open it up for questions. We are speaking approximately one day after Fiscal Second Quarter 2026 earnings call. Let's dig into it and see if we can understand it even better.
First, I think that there was a comfortable beat from already a highly elevated expectation.
So we had a range of estimates— I collected those from Yahoo and TipRanks, each one had about 30 [analysts], probably a lot of overlap between them. So we had a range of about 105 to 115 in terms of revenues in billion, and then we had EPS in a range of about 1.6 to about 2.15.
And not only did it beat the consensus, but also you can see what happened a year earlier, which is the circle at the bottom of the graph. So the beat was from already a pretty high growth rate expected from the year before.
So we have a measure of how each of us, myself included, performed relative to the actual results.
I was about 1.8% under revenues delivered, and 1.6% on EPS. And then you can see red is Yahoo and blue is TipRanks.
So speaking for myself, I was perhaps a little bit too conservative on my revenues, and I was a little bit more accurate, relatively speaking, on EPS. Roughly speaking, again, I think these are not big errors, 1% to 2%. Worst case, 3% on the consensus basis.
Now, on the segments, these are the actual growth that we ended up with, iPhone almost 22%, 16% on services, 8% on the iPad, which is impressive. 5.7 on the Mac, we'll talk about that a little bit, and 5% on wearables and growth.
Segment level, again, the worst case, you're looking at an 8% overestimation on the Mac. The Mac— I think a lot of people, once they saw the Neo come out, once they heard about the Mac mini stockouts, when they heard about the Claude bots, you know, everybody buying up all these Macs, there was an expectation of a big boom in the Mac, but those all happened fairly late in the quarter. My expectation was a little bit over, but not as much. I was off about 3% on that estimate. So although we saw 5.7% growth, some people expected double digits. Also, the pros had the same fault there.
Overall, though, I think these are pretty impressive. I didn't break out the geographic segments. China grew extremely well. Rest of the world, that grew very well. Management also pointed out that they're doing very well in developing markets. So overall, regionally, there were some extraordinary performances. But as we see here, just the iPhone was incredible, 22%. Very similar to performance in the previous holiday quarter, where, again, unprecedented growth, or at least in the near history of the product.
And we'll get into some reasoning why that is. People talk about super cycles, people talk about the assumption that we have these giant surges once in a while. Well, here's how to look at it.
There are two graphs here. The bottom graph shows in green the net sales, but trailing 12 months, so it's smoothed out, so we don't see the spikes on the holidays. That's the green line. Above that, we have the EPS line. Now you'll see how they tracked very similarly for a while, and then they began to diverge. That occurred around COVID. It also occurred during the surge in services, especially subscriptions and services. But still, there's a similar pulse, if you will, a cyclicality to it.
I mean, part of that has to do with the introduction of a new form factor. This has been true all the way back since 2012. When a new iPhone comes, especially a new, distinctive-looking iPhone, people will go out, especially in China, buy it for showing off that they have the latest, which there's nothing wrong with that. But then the second year usually is not the same, the phone is not new, it's the same form factor. That has to do a lot with tooling. That's a long, old story, that the tooling is depreciated on a two-year schedule, so you're going to produce roughly the same look a couple of years in a row, and then by the next cycle, you'll see people upgrading or replacing their older phones. So you're going to have this— I guess what they used to call a super cycle.
And you see it also in the upper graph, where I try to separate out of sales just the phones. Now this is an estimate because we have no unit sales for the phones since 2018, so some of that is an estimate. But you'll see again, once you smooth out the cyclicality, you'll see these surges once in a while. Now, again, this is a valid observation, but I don't think it's the main driver. The oscillation isn't huge, it might be significant, but it's a blend of many things.
The bottom graph is particularly interesting. The gray areas are when the stock price fell. And the red line represents the derivative of EPS. And you'll see how, when that is about to dip, there's usually a stock price sale going on. I wouldn't say it's predictive, but it's an interesting pattern to go through.
So what's happening now? You'll see from the iPhone, there's a new surge happening. Now, when Tim has been asked this question, he says that, well, the iPhone 17's really nice, people really love it, and that's a good answer, but the fact is, it's a distinctive-looking product. Some say it's the orange color, but it's certainly attractive. So we're seeing this pattern, a nice surge.
We'll get into the guidance in a minute, and that actually demonstrates that we're in some kind of an acceleration. But here's the thing, underneath all that, services is just absolutely steady growth, compound growth, and as a result, it just lifts the whole story.
Here, services is at the bottom. Normally, in a graph like this, you want to put the oldest products at the bottom and the newer ones at the top, but I wanted to highlight the fact that services is foundational, in the sense of showing how it holds up everything else.
Most people put it the other way, they say the iPhone holds everything up, but services is looking more and more to be the thing that keeps people in the ecosystem. There's a lot of value there. There's a lot of things people depend on there, and I think it's one of the reasons people don't switch. So it's another one of these stories that people aren't appreciating enough. It's been years and years of pounding the table on services, but here you see it, just how important it is. It's the tide that lifts all the boats, and the boats being all the products.
So let's now talk a little bit about margins. Unbelievable, unbelievable margins. We just hit almost 50% on gross margins. Gross margin here is the blue line. And that's composed of two subcategories. We have services in red at the top, and we have products with the purple triangles.
And although products margins are exceptional— they're right around 40%— those services, again, are pulling the whole average up, and you can see that bend in the curve in the blue line, where we were very steady around 40%, but as services took more and more; it just pulled the whole curve up.
And we also see here operating and net margins, which also are going up, naturally. There is a little bit more operating expense. We'll get into that, which maybe decreases the slope of the bottom line. But this gross margin is absolutely incredible. We just haven't seen anything like this since 2010-11. We saw that surge back then, and then it sort of leveled out, and everybody was happy with 40%, and now we're flirting with 50. I just cannot believe it.
Just one more thing. I remember being an analyst decades ago, when I was looking at different companies in hardware and software, in phones and computers and so on, and everybody was really impressed by Microsoft, because Microsoft, had an 80% gross margin, because there was very little cost of sales. That's exceptional. An 80% margin business is a money printing machine. And everybody was impressed and jealous of Microsoft that they could pull that off. Of course, Microsoft, a software company, is going to have extraordinary margins, right?
And so for a phonemaker like Nokia, there was something to be jealous of. And here we are with Apple services, a significant component on the business, approaching also almost 80% right now. And it's still rising. I just can't get over how impressive this is.
R&D Acceleration
A little bit about the difference between gross and net— you have to take out the operational expenses, and this is what we have here. It's interesting what's happened. Obviously, you see R&D overtaking on the absolute basis. So R&D overtook SG&A already in 2021. And now it's just [going] almost vertical.
By reading a little bit the guidance, I think it's going to taper a bit into the next quarter. But what we see is a significant R&D increase, also as a percent of sales, which you're seeing below in the graph below, but in a stacked fashion. In that sense, the two of them together are now approaching— haven't yet reached— a percentage of sales that was in evidence around 2007 and 8, when the iPhone was just emerging. But you'll see back then, R&D was tiny, SG&A was huge as a percent of sales. So much so that R&D—this is during Steve Jobs era, R&D was like 2% of sales. And now it's approaching 8%, which is extraordinary. Because that's an engineering company that's doing breakthrough work.
And that's something that Apple's not recognized for doing. There's a negative side of spending a lot on R&D. The positive, though, is that Apple is doing a lot of fundamental research now. This isn't fixing products, this isn't updating OS. This is engineering that is really driving what might be considered breakthrough. And that's something— and I've said this to the media when interviewed about Ternus and the succession— I said, the new CEO will need to be— this is before he was announced— I said [the CEO] would need to be someone who is acceptable to engineering, because Apple is an engineering company today. Fundamentally, culturally, operationally, it's an engineering company, and it is being now led by an engineer.
Steve Jobs was not an engineer. And none of the other CEOs were engineers. Tim Cook was an operations manager. He was excellent in a fundamental part of the business. And that is acceptable to engineers, culturally speaking. But the thing is that John is an engineer's engineer. He understands the culture of engineering and will understand how to motivate and retain talent, as well as to allocate capital effectively, not wasting it on pipe dreams. Engineers have a tendency to try to chase dreams, by the way, so you got to be harsh sometimes to shut things down. So, keep an eye on the R&D— it's a great story.
However overdoing it can be a problem. There are downsides to an engineering-led company where, again, it turns into kind of an engineering welfare state. Engineers tend to get projects and do a lot of navel-gazing, which needs to be managed carefully.
Now, let's just touch on ACTIVE. Active is the number of users, the fundamental measure of the value of the company. It's not counting iPhones. It's counting users, and these are the comments from management, just so we capture them. They come every quarter. Sometimes some products are mentioned, sometimes they're not.
So here's what we have exactly on the topic. Record upgraders and customers new to the Mac. They mentioned that Mac lifespans have been long, which is good and bad. They talk about the iPad, half the customers being— over half— new to the product. Same with the Apple Watch, this has been going on for a while.
So this is going to be important when we measure installed base, because if we see every quarter an estimate for the number of watches, or Macs, or iPads, you just take half of that and allocate it to the installed base, and the other half is growth of the installed base. So there's an interesting way to measure that, and I've been applying it. We're going to keep an eye on this.
And finally, there was a mention with respect to India during an answer to the question. The citation is that the iPhone, Mac, iPad, watch, all of these have a majority of customers that are new to the product in India. As you would expect, part of the developing market story. But this drum is still getting beaten. And that's a positive. Always want to look forward to that every quarter.
So let's jump in now to what I thought was the most unexpected comment during the call. I've pasted in here exact, verbatim the comments from the CFO. I need to point out a few things here, and I've highlighted these things in bold.
One is the dividend. The dividend number is 3.8. Last quarter was 3.9, so that's not a surprise. However, open market purchases were only $11 billion. Now, that is represented in the graph by the buyback, and that is this mustard color. And you'll notice it is extremely low. The previous quarter, we were over 25 on buyback, so we're less than half that. This is an anomaly. You'll see that it does not match the rest of the graph at all.
The blue area is dividends. The reddish area is net share repurchases, or settlements. And there's a pattern to both. Dividends has been growing in a predictable fashion, very steady. Buybacks have been somewhat steady, but up and down a little bit. During the last few periods, we've seen something unprecedented.
Now, you'll see that the 11 from last quarter was offset by a much higher number the previous quarter, but on balance, we're still down. And there's also these comments that say that they are abandoning the net cash neutral position. And I'm wondering if it's already started, because this $11 billion caught me by surprise.
I've highlighted that "our repurchase activity at any time can be affected by a number of factors that we take into account." So this was essentially explaining why sometimes there's a difference in the amount of purchases, right? And then in the middle of that commentary, he says, "as you're aware, we recently announced a CEO transition." Why does that comment fit in the middle of a paragraph, talking about the general theme?
I read this as it suggests that already the CEO choice is deciding how much to allocate to capital returns. And it appears— and again, I could be wrong— but it appears that John is probably against the idea of huge returns to shareholders in capital form. So keep an eye on this. This was, I found, very, very strange and out of character in a way. Very out of character of a Tim Cook presentation. I'm not judging it, I'm just pointing out that it isn't normal.
So here's the bottom line. This is the graph representing what's happening with the entire cash position and return of capital. The debt has decreased slightly, and it has been decreasing. And that's a good thing. As interest rates go up, you don't want to hold debt. A lot of that is fixed rate, but they're not taking on more. It seems like they're paying it down.
Net cash, which is the blue dotted line, has now been increasing two quarters in a row. Now, it's increased in the past, but never for long. It's had only one tick, during the holiday period. Here, where we're seeing two ticks— holiday and the quarter after.
Now, if you'll notice here, I'm going to try to zoom in. Those red lines represent what I would say were the trajectories to get to net cash zero. So that blue line, since they announced it, they kept missing the target. You would see that, another year goes by, and there's a notch up. Overall, the trend is down, but they haven't kept that path down all the way to zero. And that is now completely abandoned.
Again, we'll have to figure out why. The buyback, as I mentioned, halved— at least more than halved— to 11. Net cash zero abandoned, $100 billion net cash reduction. You'll see that this blue dot line has gone down by about half. It was down even further than that until it came back a bit. So that is going from about $160 billion net cash to the current $62 billion, which is why we get to 100 reduction. And $1 trillion overall return, which is, again, something they mentioned. In fact, they're at $1.085 trillion. And still $100 billion will be allocated further. Whether they actually spend it is another matter, but that's been approved.
So now— is this good news or bad news? I don't think it matters. I think at the end of the day, the value of the company doesn't change because of this. The value might be captured in the share price, or it might be captured as a percentage of the company that has been increasing.
In fact, let me just pop into the next slide. What does this mean? Are we never going to reach what I call the halving? Well, we were at the maximum 26.5 billion shares. And now we've reduced that to about 14.6. Half would be 13.2. So we're still going down. But there's 1.4 billion shares to go before it's half of what the max was. Now, this is an arbitrary figure. I just thought it was an interesting target to have. And as you can see, it's getting asymptotic as the price goes up. It should be harder and harder to get there. But we have $100 billion allocated. $260 billion at the current share price would need to be spent to get to half. But probably we're not going to get there. I really don't— if I were a betting man, I would say we're probably going to see this taper.
Let's look a little bit at guidance. This is based on what management already communicated. So if you put in the numbers they gave us, you will get revenue growth of 16%, coming at about— well, they guided 14 to 17, so I'm estimating 16 conservatively right now. That gets you to $108.7 billion. If you put in the other numbers— the margin, the OI&E and the tax— and do something about this share reduction. (We're still going to probably see a share reduction.) We're going to look at EPS 1.92. Which is another 22% growth. This is what we had last quarter as well.
I'm putting gross margin at the top of the guidance. [Last quarter] they went over. They guided high, and even so they went over, so I'm going to assume they're going to still hit towards the upper end of the range. I'm exactly at the upper end of that range.
If those things are true, the iPhone almost necessarily has to grow about 19%. Now, here, I'm dialing the Mac way up to 18% growth, because I do think they're going to get a lot more Mac Neos into customers' hands. Now, that's a lower price point, but it will drive sales. So yeah, I could be a little bit high on this. If I am, then iPhone needs to go a little bit higher because I still think they're going to get the revenue there.
They did warn that iPad is facing a tough comp, so I'm putting iPad down 3%. Wearables and home, 4%. It was 5% last time, so maybe consistency there. And Services, just the same as before, 16%, could come in a little bit less. But if it does, again, it's going to be put into something else like the iPhone.
So overall revenue growth, I think 16% is very much being telegraphed. And as I always say, they already have April on their books. They're communicating exactly at the end of April. They're not going to lie to us and withhold data from April. They know about a third [of the quarter] already, so that's why this guidance is so useful.
And, as you saw with my error analysis, nowadays, people's estimates are very close. There's a lot of consistency. We're not off more than a couple percentage from each other. That's just because they're so accurate on their guidance.
And speaking of analysts, one more graph. This is just some of the latest price targets. I'm just trying to bring everything together that came out today. This is all very brand new. A lot of targets moved up. Not that it's all that important, but people are getting more and more excited. Almost all the targets from anybody who has a positive— effectively a buy rating— is now above $310 as a target. There's two who are negative, that are at 270 and below. This is Barclays and Rosenblatt. And then there's a few which have no ratings. So they're typically neutral.
But overall, all these numbers are higher than they used to be. Now, again, I don't use that very much, but it's worth keeping an eye on things just to get a sense of how the sentiment is out there. And it looks like the stock is responding positively today. Not by much— 3% or so, last I checked. But that's the story today.
So given that, this is my first take on the quarter. Love to take questions.
-- End of Presentation --
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Below are Horace's live commentary during the release of Apple FQ2 2026 Earnings, lightly edited. For an in-depth look, and a discussion of what turned out to be a record-breaking quarter, join uss at Asymco Office Hours: Apple Live Q&A.
Transcript: Friday 30 April 2026, 4:30pm-6pm EST | asymco@mastodon
Apple will release earnings at 4:30PM ET and conference call begins half hour later and lasts for one hour. I will try to make some comments as I process the news. This might be the 75th Apple conference call I listen to.
My estimates: EPS $1.98 Rev. $109.2b iPhone Rev 55.716684 Mac Rev 8.640 iPad Rev 6.9552 Wearables & Home Rev 7.522 Services Rev 30.3753
iPhone revenue came in at $56.99 billion. My estimate was $55.71b.
Here is a graph of the expectations vs. actual Revenue results.
iPhone revenues grew 22%. Extraordinary. The growth barely slowed from 23% the previous quarter.
Mac revenue growth was 6%. Slightly less than I expected.
Revenues were up 17%, earnings per share were up 22%. Best March quarter ever.
The board of directors has declared a cash dividend of $0.27 per share of the, an increase of 4 percent. Repurchase program authorized for up to $100 billion for the next 12 months. No surprises here.
Greater China growth was 28%.
Apple shares are down 0.6% after-hours. Normal drop when company beats on the top and bottom. The big drop comes when the CFO talks guidance.
John Ternus will join the call for a few remarks.
Gross margin came in at a record high of 49.3%. This is three months after the great memory panic of 2026 was declared.
Shares fall 0.81% after John Ternus remarks.
Apple reports double digit growth in every emerging market.
Mention of Mac Neo leads to more drops in the share price as the pain of share growth sinks in. Now down 1% after hours.
iPhones went to the moon, stock not mooning.
“Our strong business performance during the March quarter generated over $28 billion in operating cash flow and drove new March quarter records for both operating cash flow and EPS,” The fact that Apple did not turn over this cash flow t...
5% in Wearables and Home. Modest growth is shameful growth. Compounding shompounding.
Apple has 6 stores in India. So much more to do there.
Supply constraints mean that the growth could have been higher —CFO.
Active iPhone install base grew to all-time high. (No surprise). Customer satisfaction was 99% for iPhone 17 in the US.
Customer satisfaction for Mac was 97%. Half of customers buying an iPad are new to the product. Most of these new customers are in emerging markets. Customer sat for iPad at 98%.
Tap to pay (Apple Pay) now in 50 markets.
Net cash was $62 billion. No longer placing net cash neutral as a target!!!! OMG OMG.
June Q guidance: 14% to 17% growth. Shares recovered to +1.35%.
Margin guidance: 47.5% to 48.5%. Despite the great memory panic of 2026 being in full effect.
Shocked, shocked, shocked that CFO remarks did not crash the stock.
Tim says they did see higher memory costs. For the June quarter they expect significant higher memory costs and more beyond that. Still, margins are brilliant.
On March 18, 2026, Bernstein SocGen Group reaffirmed its “Outperform” rating and $340 price target for Apple Inc.
Comparing it to Samsung’s 2009–2013 strategy, which saw Samsung increase its global smartphone share from 4% to 32% in Q3 2013, Bernstein emphasized Apple Inc.’s recent product launches as a strategy to widen portfolio price bands, driving share gains at the low end while raising prices at the high end to maintain margins. Although Samsung eventually lost market share to Chinese manufacturers, the firm said the stickiness of Apple’s iOS ecosystem will help it sustain long-term market share.
Bernstein projected a 12% increase in fiscal 2027 EPS from share gains, split equally between hardware and services, assuming Apple Inc. captures 10% of Chinese manufacturers’ smartphone market share amid their supply issues. Some noteworthy product developments include the introduction of the $549 AirPods Max 2, the App Store cost reduction in China from 30% to 25%, and plans for a foldable iPhone.
NB: Separately, it's been reported that Samsung might see its first operation loss from its phone division, resulting in Apple capturing 100% (or more) of global smartphone profits. Simultaneously, Samsung is seeing huge profit gains from memory, even overtaking Nvidia's profitability. This is remarkable…
Apple is set to report fiscal second-quarter results on April 30, and investment firm UBS is expecting a “slight” upside to the consensus, based on Mac and iPhone-related strength.
“Supply chain checks and analysis of sell-through data suggest modest upside to our iPhone estimates while demand for the Neo and Mac mini suggests demand at least in-line with our Mac rev forecast,” UBS analyst David Vogt wrote in a note to clients. Vogt reiterated his Neutral rating on Apple but raised his price target to $287 from $280.
Turning to guidance, Vogt said he is expecting a “solid” offering for the June quarter and upped his earnings estimates as a result.
“Rising memory prices and Apple's ability to secure adequate supply is driving smartphone share gains for the iPhone product line at the expense of the broader Android ecosystem in our view,” Vogt explained. “In addition, solid demand for the Mac portfolio in part driven by initial success of the lower priced 'Neo' as well as demand for the 'mini' increasingly used to run AI agents like OpenClaw should drive incremental upside relative to our expectations.”
A consensus of analysts expects Apple to earn $1.94 per share on $109.73B in revenue for the fiscal second quarter.
TD Cowen analyst Krish Sankar reiterated a Buy rating and a $325 price target on AAPL stock. He expects Apple to report over 15% year-over-year revenue growth for the March quarter and to guide June-quarter revenue up about 10% year-over-year, driven by healthy iPhone 17 demand and the new MacBook Neo.
Key watch items: Apple’s ability to manage memory cost inflation and the launch of a compelling AI‑powered Siri. Sankar believes Apple will continue gaining share in both smartphones and PCs, with sentiment already positive heading into earnings.
Apple is set to report earnings on April 30. Currently, analysts expect AAPL to post revenue of $109.45 billion in fiscal Q2, up from $95.36 billion in the year-ago quarter. Further, the company is expected to report earnings of $1.95 per share, compared with earnings of $1.65 in the prior-year quarter.
Revenue and EPS consensus, year-ago results and my expectations
Yahoo Finance
Yahoo Finance's revenue estimate for Apple in Q2 stems from 31 analysts. As of April 25, the average estimate is $109.69 billion, with a low of $107.08 billion and a high of $115.37 billion.
For the earnings per share estimate, 32 analysts put it at an average of $1.95. The low is $1.56 and the high is $2.16.
TipRanks
TipRanks also does its own analyst polling on Apple's quarter. In its forecast as of April 19, its consensus is for a revenue of $109.45 billion, with a high of $115 billion and a low of $105 billion.
On the earnings per share, the consensus is $1.95, with a high of $2.16 and a low of $1.56.
A summary of the expectations include year earlier results and my own estimates is shown the following graph:
A part of Horace's interview with Asahi Shimbun on the 50th Anniversary of Apple's founding. The portion here discusses management succession and occurred on April 1. Apple announced the succession of Tim Cook as CEO to John Ternus last week. This analysis of Apple leadership decisions focuses on culture and attributes of the firm rather than attributes of the persons leading it. It may prove a more reliable predictor in future leadership changes.
…, the speculation is John Ternus is the next in line. I think that's a very plausible hypothesis. And one reason, by the way, is I always maintain if you study the company from a cultural point of view, you'll realize that there are people who cannot be CEO. You may not know who it's going to be, but I can tell you who won't be. Many people over the years suggested candidates, and I would say no, never. And here are examples. Johnny Ive would never be CEO. An external hire would never be CEO. Even a head of marketing would never be CEO. Many people think that Apple is a brilliant marketing company. No, it's an engineering company. It's a huge secret out there. →
Writing the story of John Ternus' tenure as Apple CEO from April 21, 2040. What changed and what didn't.
It’s been 15 years but John Ternus has finally stepped down as Apple CEO. Analysts described the transition as expected rather than disruptive, noting that investors had long anticipated Ternus’ eventual departure. Nevertheless, he leaves with many questions still unanswered about Apple’s long term strategy. Apple incoming CEO faces a defining challenge: Fixing the company’s Services dependence. It’s been a tumultuous tenure for Ternus but he is leaving with significant accomplishments: John grew Apple devices to 4.5 billion from 2.5 billion when he took over in 2026. Many have pointed out that he has been building on… →
In January this year Apple reported that there were 2.5 billion active Apple devices in use. This figure has been getting updated for years and I’ve been reporting its trajectory and other measures that are correlated to it. For instance the number of Apple subscriptions, Apple Services revenues and other historical indicators such as iCloud accounts and Apple Music.
Simplifying, I published the “ACTIVE” model which makes some basic projections of this total device count and it’s shown below” One element of the analysis that has eluded me was the more precise composition of this total “devices”. →
Both researchers say Apple share in China is about 19%, nearly tied with Huawei at 20%…
Some analysts are increasing their targets finally realizing that the memory supply crisis might be beneficial to Apple. This should have been noted already three months ago when Apple provided extraordinary guidance for the March quarter. →
MacBook Neo Sold Out Through April → Despite high demand and stockouts, Apple's strong brand and competitive pricing could turn challenges into opportunities for market expansion.
Microsoft’s cheapest laptop is three times more ex…
As I will argue in a further post perhaps this is one of those pivotal moments. →
Goldman forecasts fiscal second-quarter EPS of $2.00 → Goldman Sachs remains bullish on Apple, forecasting $2.00 EPS driven by strong iPhone and Services growth, dismissing overly pessimistic sentiment as the company consistently gains 100 million new customers annually.
My target of $1.98 seems amiss.…
What is always happening, the reaction that is always ongoing, is the creation of 100 million new customers every year. Accelerating this process is not a matter of just new products or change in sentiment with AI. Much of this rate is due to overall global economic and demographic change. →
What’s the consensus on $AAPL? → Apple's strong analyst backing with a 15:1 Buy:Sell ratio and $315 target contrasts its 39% year-to-date rise, overlooking potential future growth.
The consensus is positive though share price target does not consider significant share gains and service growth acceleration into 2027.
NB: The consensus is positive though share price target does not consider significant share gains and service growth acceleration into 2027. →
Apple 3.0: JP Morgan expects that Apple will beat its own guidance next week → Analyst Samik Chatterjee projects Apple's EPS to rise to $2.05 from $1.96, driven by strong iPhone and Mac demand, with a revenue boost to $112.7 billion, while I estimate a slightly lower 20.2% EPS growth, anticipating guidance will be met.
Read the original for a more detailed commentary from Chatterjee. He implies Apple will grow EPS 24%…
…My own estimate is about 20.2%. I look forward to a lively quarterly update. The primary source of growth must be the iPhone and I have that growing at 19% revenue growth. Last quarter the growth was 23%. Perhaps Chatterjee is assuming a similar growth rate into March quarter. That is not impossible but I am assuming guidance will be met rather than exceeded. →
In January this year Apple reported that there were 2.5 billion active Apple devices in use. This figure has been getting updated for years and I've been reporting its trajectory and other measures that are correlated to it. For instance the number of Apple subscriptions, Apple Services revenues and other historical indicators such as iCloud accounts and Apple Music.
Simplifying, I published the "ACTIVE" model which makes some basic projections of this total device count and it's shown below"
One element of the analysis that has eluded me was the more precise composition of this total "devices". In other words, which devices and what is their mix. We have seen numbers for iPhones but not for other types of devices. I should note that this is not easily derived because we have neither the units sold (only revenues) and we don't know how long they stay in use. The measure of active population implies that the products are bought, used and eventually retired.
The only clue we have, beside quarterly revenues--and even there wearables and home are not separated by product--is that management occasionally mentions that "more than half" of buyers of a specific product are "new to the product". It's not much to go on.
But there are other data sets we can tap. StatCounter provides a share of platforms in use by aggregating browser identifying data for a moderately large set of web sites. That may help with share of base but not with how much the total base is. Various other analysts do try to summarize some of the installed base for particular dates.
Combining all the available data and some interpolation, I set out to do is to provide a yearly count of the population of Apple devices for each year since 2007. Then to try to forecast this population to 2030. The result is shown below:
The following is a summary for the components for the end of 2025 in millions:
Year-end
Mac
iPhone
iPad
Watch
Apple TV
HomePod
Other
2025
233
1500
442
203
58.5
61.75
0.5
This history looks like this:
What about the future? Let's dig in.
This is a future five years away. Is this growth rate and consistency in mix a reasonable assumption?
To answer, we should zoom out and look at not just Apple's device base. The following graph shows also Android phones and tablets, Windows, Linux (PC) and Game Consoles.[1] It contrasts mobile and "non-mobile" computing and shows the total global population (blue line).
I have several observations:
The total device population now exceeds the total human population. The total number of phone lines was already higher for some time[2] but what are shown here are "computers" insofar as they have CPUs and operating systems that can run third-party apps.
Given the device count exceeds human count, how much higher can this total go? The forecast shows a slowing of growth within the next five years but this is not a certainty. The attach rate of devices/person could well exceed 1.2 to 1.3 and go to levels seen in wealthy countries (above 2.) If that is the case then the device total may exceed 16 billion at saturation. This has implications for how far current strategies and business models can run.
The composition of device types is fairly constant and form factor substitution is rare. New categories beyond phones and current wearables are hard to anticipate but even if they emerge, the evidence suggests they are additive. Evidently the phone did not so much displace the PC but build on top of it. The potential for wearables and home devices to explode is there but it's hard to image these stealing "share of pocket" any more than phones stole "share of desk or share of backpack". If they do explode, they will add to the total via higher attach rates. 3x human population (24 billion) is possible with new wearables and home[3].
AI holds many promises but how AI is accessed is not necessarily requiring of or benefiting from new device types. The smartphone is still the best AI device imaginable[4]. Ambient or passive computing can be provided by existing wearables but, as the graph shows, these are augmentative to phones. If AI introduces a completely new form factor, the impact will take decades to diffuse. As the graph shows, the mobile era is now approaching 20 years with the next five years foreseeable with some confidence. The next 15 years will be discussed in a future post.
Android typically captures non-consumers who eventually churn into Apple devices. This means that as long as non-consumption exists, Android grows and as long as Android exists Apple grows. If and when Android growth stops then the dynamics will change and Apple might change strategy to accelerate churn.[5]
Google and Apple will be the primary distributors for all software and services into the foreseeable future. Try as they might, challengers face over 9 billion in installed base. Note well how entrenched Windows has been on the desktop even as (free) Linux and (better) macOS alternatives have harvested usage. This rigidity has held over the 1.5 billion addressable market for 30 years now. For additional evidence consider the dynamics, or lack thereof, of the game console business.
It excludes servers and early phone platforms such as Symbian, Blackberry and Linux phones.
According to ITU Facts and Figures 2024, there were 112 mobile-cellular subscriptions per 100 inhabitants globally in 2024
Households are 1/3 human population and vehicles are only about 1/7 so Home and Automotive don't move the needle much.
AI is, if anything, putting the "smart" back in "smartphone".
This might be what is happening with the Mac Neo, decades after the PC market saturated. Perhaps pieces have finally fallen into place but apart from Chromebooks, it's been very difficult to challenge the Windows PC head-on. (Though the iPad was possibly designed to displace some of the PC usage, it hit mainly with non-consuming very young or very old and PC use was unaffected.)
