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FEATURED ARTICLE |
Should I Buy Apple After Earnings? |
"Should I buy Apple after earnings?" is one of those deceptively simple questions that really means: |
Did Apple just prove the engine is still strong… and is the stock price still reasonable after the pop? |
Apple's answer yesterday was loud and clear on the fundamentals: the iPhone is not dead, Services is still compounding, China bounced, margins held up, and guidance didn't flinch. |
But the market's follow-up question is sharper: |
Where does Apple's "AI story" go from here — and do you pay a premium while it's still being assembled? |
Let's break it down Zacks/Agora-style: what beat, what matters, what could go right, what could go wrong — and whether Apple looks "cheap" compared to peers. |
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The earnings gut-check: Apple just posted a monster quarter |
Apple reported fiscal Q1 2026 (ended Dec. 27, 2025) with: |
Revenue: $143.8B (+16% YoY) EPS: $2.84 (+19% YoY) iPhone revenue: about $85.3B (record; +23% YoY) Services revenue: about $30B (record) Gross margin: 48.2% (notably strong) Active device base: 2.5 billion Greater China: sales up about 38% (major reversal)
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If you're a long-term Apple bull, this is the kind of quarter you want: big hardware cycle + sticky ecosystem + margin resilience. |
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Guidance: Apple didn't whisper — it guided confidently |
For the March quarter (fiscal Q2 2026), Apple guided to: |
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That combination matters: they're basically saying, "Yes, costs are rising… but we're still holding the line." |
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Product sales: what's driving the bus (and what isn't) |
iPhone: the supercycle signal |
Apple credited "staggering" iPhone demand (iPhone 17 cycle per coverage), with records across geographies. |
The China rebound is especially meaningful because it changes the psychology around "Apple is losing China forever." A +38% print forces the bear case to prove itself again. |
Services: the margin engine keeps compounding |
Services hitting around $30B is the quiet reason Apple trades at a premium.
It's the annuity inside the hardware company. |
Mac / wearables: softer pockets |
Coverage noted Mac and wearables sales declined while iPhone and Services did the heavy lifting.
Not a dealbreaker — but it matters for breadth. |
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The earnings call "AI" story: Apple is choosing distribution over model-building |
This is where the call (and the coverage of it) gets interesting. |
Apple is working to upgrade Siri and has indicated it will integrate Google's Gemini into Siri to power a more personalized experience.
This fits a strategy of being AI-model agnostic — let the best models compete, while Apple controls the device ecosystem and user experience. |
They're also investing internally: R&D spending was reported up 31% to $10.8B, and coverage cited an acquisition of AI startup Q.ai for around $2B. |
Bull interpretation: Apple is building a pragmatic AI stack: ship features, partner where needed, protect privacy and UX, monetize via devices + Services.
Bear interpretation: Apple is still playing catch-up in "headline AI," and partnering risks making Apple feel like a distribution layer for other people's models. |
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The real risk buried in the call: supply + component costs |
Apple warned about: |
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This is important because it's the classic way great demand turns into "only good" results:
you can't ship enough, or your bill of materials rises faster than pricing power. |
Apple's margin guide suggests they think they can manage it — but it's the swing factor. |
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Valuation: is Apple "cheap" after earnings? |
Let's put a stake in the ground with current market data. |
AAPL price: $258.28 P/E: ~30.28x Market cap: about $3.0T
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Compared to mega-cap peers (P/E snapshot) |
Microsoft: ~30.14x Alphabet: ~23.65x
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So is Apple "cheap"? |
Not in the classic value sense.
But it's not wildly expensive relative to Microsoft on headline P/E, especially after a quarter that revalidated demand. |
Where the "cheap" argument can exist is relative to certainty: |
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If you believe that combination persists, paying ~30x can be rational. |
If you think the iPhone pop is temporary and AI becomes a perception gap, ~30x is where the stock can get "stuck." |
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Dividend: nice, but not why you own it |
Apple declared a $0.26 quarterly dividend (annualized $1.04).
At ~$258, that's roughly a ~0.4% yield — basically a quality signal, not an income strategy. |
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The bull case: why Apple could work from here |
iPhone demand is stronger than the market modeled (and China is back in play). Services keeps compounding — the high-margin engine that supports the premium multiple. Margins held even with component cost concerns — and guidance says they intend to keep holding. AI strategy is becoming clearer: integrate best-in-class models (Gemini), expand Siri capabilities, invest in R&D/acquisitions.
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The bear case: what can go wrong from here |
Component cost inflation (memory) or supply constraints bite harder than expected, squeezing margins or limiting shipments. AI perception gap: if Apple's "partner + integrate" approach is seen as lagging innovation, the stock can lose multiple even on solid fundamentals. Mac / wearables softness persists and growth narrows back to "mostly iPhone + Services." After a huge quarter, expectations reset higher — and Apple becomes harder to impress.
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So… should you invest in Apple after earnings? |
If you're a long-term investor, this quarter was the kind that often creates a decent "add" window even if you don't nail the timing, because it revalidates the franchise: |
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If you're a valuation purist, Apple isn't "cheap" — it's premium-priced quality. The decision becomes: Do you want to pay ~30x for Apple's stability + Services + ecosystem… or hunt cheaper multiples elsewhere and accept more risk? |
The practical "Cheap Investor" move |
Instead of all-in, consider a two-step approach: |
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That's how you participate without pretending you can predict the next 10 trading days. |
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Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investing involves risk, including the potential loss of principal. Always do your own research before making investment decisions. |
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