Bernstein raised its price objective on Apple to $350 from $340 and reaffirmed an Outperform stance after the iPhone maker posted solid fiscal second-quarter results and offered guidance implying continued strength into the summer months.
Apple reported revenue of $111.2 billion for the fiscal second quarter, a 17% increase year-over-year that exceeded the top end of the company’s own guidance. Currency movements provided roughly a 2.5 percentage point tailwind to that top-line strength.
The iPhone business was the standout, generating $57 billion in revenue, up 22% year-over-year. Services also contributed meaningfully, rising 16% to $31 billion. Earnings per share came in at $2.01, a 22% increase, while gross margins expanded to 49.3%, beating consensus estimates.
For the June quarter, Apple guided to revenue growth in the range of 14% to 17% year-over-year, a marked acceleration from the low-to-mid single digit pace seen in recent quarters. Management expects gross margins to be between 47.5% and 48.5% for that period.
Bernstein analyst Mark Newman notes that the market share gains appear to be materializing as expected. "Apple has a once in a generation opportunity to gain market share over the next 12-24 months as rivals stumble unable to get enough memory (in some cases CPUs) or cannot afford to pay market prices," he wrote.
Following the quarter, Bernstein increased its revenue estimates for fiscal 2027 and 2028 by 3%, driven by the stronger starting point and higher average selling prices as Apple broadens its product lineup into both higher-end and budget tiers. The firm specifically cited Apple’s planned expansion into the high end with a foldable phone and into the budget tier with the iPhone 17e, 18e, and MacBook Neo as contributors to rising ASPs.
Newman also highlighted upcoming updates to Siri and Apple Intelligence as potential catalysts for the business.
At the same time, Bernstein trimmed its gross margin estimate for fiscal 2027 to 47.5% from 47.9%, pointing to rising memory costs that management indicated will drive a 130 basis point sequential decline from the second to third quarter. The analyst expects those cost pressures to intensify before easing, with the December quarter - fiscal Q1 2027 - representing the peak impact.
Crucially, Apple’s procurement approach alters the timing of those effects. Because the company locks in component costs at the start of a product cycle through bulk purchasing, the full extent of higher memory prices is delayed compared with most smartphone and PC peers. "Unlike most smartphone and PC makers, Apple’s unique supply chain management means the full extent of memory prices will not be felt until the December quarter," Newman wrote.
In addition to the operational and supply-chain dynamics, Apple retired its long-standing net-cash-neutral target and announced a buyback authorization in excess of $100 billion. Bernstein points to this shift as providing Apple’s management greater flexibility as the company navigates an impending leadership transition from Tim Cook to Kevan Parekh.
Implications for markets and sectors
- Technology hardware and smartphone supply chains could see competitive rebalancing if Apple captures incremental share.
- Semiconductor and memory markets are directly implicated by the cost pressures that Bernstein cites.
- Capital markets may react to the large buyback authorization and the shift away from a net-cash-neutral posture.