Apple Shares Are Up 27% This Year. Is the Stock Still a Buy Ahead of Earnings?

Apple is set to release its fiscal fourth-quarter 2026 earnings report on Nov. 2. Here’s Morningstar’s take on what to look for in Apple’s earnings and the outlook for its stock.

Key Morningstar Metrics for Apple

• Fair Value Estimate
  : $290.00
• Morningstar Rating
  : ★★
• Morningstar Economic Moat Rating
  : Wide
• Morningstar Uncertainty Rating
  : Medium

Apple Earnings Release Date

• Monday, Nov. 2, after the close of trading

What to Watch for in Apple’s Q4 Earnings

• We’ll be watching iPhone revenue, particularly guidance for the December quarter, which reflects the majority of the new iPhone release (including the new Duo). We expect strong year-over-year growth but higher prices from memory inflation, and the impact on unit prices is the key metric. Prices and the impact across Mac and iPad will be notable too, but iPhone is the overwhelming driver of the business.
• Gross margins are also in play. Apple raised prices midway through 2026 to offset memory inflation, but will still share some of the pain. We expect some modest margin compression through 2027 as a result, but the magnitude will be a primary focus.
• For the first earnings call with John Ternus at the helm, we primarily expect continuity. Apple is typically pretty tight-lipped on its calls, but since Ternus is a product guy and Apple has unveiled a plethora of new products lately (iPhone 18, iPhone Duo, MacBook Pro with touch screen), we expect him to focus there.

We view Apple stock as moderately overvalued compared with our $290 per share fair value estimate. We think the market is a bit overenthusiastic about iPhone shipment growth in the longer term.

The following are excerpts from Morningstar’s company report on Apple.

Fair Value Estimate for Apple

With its 2-star rating, we believe Apple’s stock is moderately overvalued compared with our long-term fair value estimate of $290 per share. We project 10% compound annual revenue growth for Apple through fiscal 2030. The iPhone will be the most significant contributor to revenue over our forecast, and we project 11% growth in iPhone revenue over the next five years. Services are Apple’s next-biggest revenue contributor over our forecast, and we forecast more than 10% services revenue growth over the next five years.

We forecast gross margins to rise past 50% in fiscal 2030, up from 47% in fiscal 2025. We believe Apple can see margin expansion from a higher mix of higher-margin hardware, like iPhone Pro models, and services. We also expect Apple to continue using R&D to both maintain pricing power and trim costs.

Read more about Apple’s fair value estimate.

Economic Moat Rating

We assign Apple a wide economic moat, 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 such as the iPhone, Mac, iPad, Apple Watch, and more. We also see immense design prowess at Apple, most impressively in the deep integration of hardware, software, and semiconductors to create best-in-breed products. Finally, we see a virtuous cycle between Apple’s affluent customer base and vast ecosystem of developer partners. These moat sources elicit great profitability and returns on invested capital.

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.

Apple supplements its strong balance sheet with impressive cash flow. Over the past five years, the firm has averaged more than $100 billion in free cash flow generation annually, and we forecast significant free cash flow growth over the forecast period.

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, just as the iPhone disrupted BlackBerry in the budding smartphone market.

We also see geopolitical risk arising from Apple’s supply chain. If relations between the US and China sour, or if China threatened Taiwan, Apple could see a severe hit to its supply. Apple also faces regulatory scrutiny.

Read more about Apple’s risk and uncertainty.

AAPL Bulls Say

• Apple offers an expansive ecosystem of tightly integrated hardware, software, and services that locks in customers and drives 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 returns substantial cash flow 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, leaving it vulnerable 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 its sticky ecosystem.

This article was compiled by Colin Laidley.