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

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

Key Morningstar Metrics for Apple

• Fair Value Estimate: $240.00
• Morningstar Rating: ★★
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: Medium

What We Thought of Apple’s Fiscal Q4 Earnings

Apple’s September-quarter results were strong, with revenue rising 8% year over year to $102 billion and gross margin expanding 100 basis points year over year to 47.2%. December guidance was even better, with double-digit revenue growth expected, as well as further gross margin expansion.

Why it matters: Exceptional iPhone revenue guidance of double-digit year-over-year growth for the next quarter well exceeded our model, and demonstrates strong uptake of the iPhone 17 family, including the new iPhone Air. We like that Apple is seeing strong growth even against headwinds out of China.

• Services revenue rose a strong 15% year over year, and guidance implies continuing momentum. Apple’s services business looks more secure after an antitrust remedy ruling for Google in September allowed the firm to continue paying Apple to be the default browser on its devices.
• Profitability continues to shine, even as Apple eats up additional tariff costs. We assess tariffs as a roughly 100-basis-point margin headwind to Apple, which makes its guidance to record gross margin in the December quarter all the more impressive.

The bottom line: We raise our fair value estimate for wide-moat Apple to $240 per share from $210. We’re impressed by growth and profitability despite a slow artificial intelligence feature rollout, tariffs, and China headwinds. Still, we find the market’s valuation challenging.

• iPhone and services drive firmwide growth, and we expect a good year for iPhone revenue after a few years of lower growth. We expect services to continue growing in the low teens, especially with more conviction in the durability of payments from Google.
• We expect gross margins to continue marching upward, as Apple benefits from a higher mix of high-margin services revenue and commands pricing power in premium iPhone models. We also expect in-house chip development to continue enabling lower marginal product costs.

Fair Value Estimate for Apple Stock

With its 2-star rating, we believe Apple’s stock is moderately overvalued compared with our long-term fair value estimate of $240 per share, which implies a fiscal 2026 price/earnings multiple of 29 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, 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 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 vast ecosystem of developer partners. These moat sources elicit great profitability and returns 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 laid out a goal to become cash neutral eventually, 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 with 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. The iPhone could be unseated by a new device or “superapp.” 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.

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 up 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 Frank Lee.