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

Apple released its fiscal second-quarter earnings report on April 30. Here’s Morningstar’s take on Apple’s earnings and stock.

Key Morningstar Metrics for Apple

• Fair Value Estimate
  : $270.00
• Morningstar Rating
  : ★★★
• Morningstar Economic Moat Rating
  : Wide
• Morningstar Uncertainty Rating
  : Medium

What We Thought of Apple’s Fiscal Q2 Earnings

Apple’s March-quarter results beat the top end 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 per share 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.

• We forecast iPhone leading 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, the 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.

Fair Value Estimate for Apple

With its 3-star rating, we believe Apple’s stock is fairly valued compared with our long-term fair value estimate of $270. Our valuation implies a fiscal 2026 price/earnings multiple of 31 times, a fiscal 2026 enterprise value/revenue multiple of 8 times, and a fiscal 2026 free cash flow yield of 3%.

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, and a network effect. In our view, Apple’s iOS ecosystem extends far-reaching, sticky tendrils into customers’ wallets, entrenching customers with software capabilities and integration across disparate devices like the iPhone, Mac, iPad, Apple Watch, and more. We also see immense design prowess at Apple, most impressively from its deep integration of hardware, software, and semiconductors to create best-of-breed products.

Finally, we see a virtuous cycle between Apple’s affluent customer base and its vast ecosystem of developer partners. These moat sources elicit great profitability and return on invested capital. In our view, Apple can leverage these moat sources into continued economic profits over the next 20 years, more likely than not.

Read more about Apple’s economic moat.

Financial Strength

We expect Apple to focus on using its immense cash flow to return capital to shareholders while increasing its net leverage over the medium term. Apple has a terrific balance sheet, with a net cash position of $34 billion as of September 2025. Management has a goal to become cash-neutral, with no set timetable. We model it to hit this target near the end of the decade. Since announcing the goal in 2018, Apple has cut its net cash position by nearly 75%, from $120 billion.

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. Apple is at constant risk of disruption. We view the firm defending against this risk, however, by introducing new form factors (like a watch and an augmented reality headset) and selling an ecosystem of software and services on top of hardware.

We also see geopolitical risk arising from Apple’s supply chain. It is heavily dependent on Foxconn for its assembly and Taiwan Semiconductor for chip production. If relations sour between the United States and China, or if China were to threaten Taiwan, Apple could see a severe hit to its supply.

Apple also faces regulatory scrutiny. The European Union has enacted regulations forcing the firm to offer third-party app stores, adopt open messaging standards, and restrict it from gatekeeping its repair materials to third parties. Similarly, there are ongoing antitrust cases in the US that could affect Apple’s walled garden ecosystem. All these help chip away at the firm’s differentiation, but we believe it is offsetting this by adding sticking points for customers, like new services and devices.

Finally, we see low environmental, social, and governance risk for Apple. The firm has committed to full carbon neutrality by 2030, and we believe it will achieve its goal. The potential future loss of talented human capital could be another risk on this front.

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 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.