We
raised
our
fair
value
estimate
for
shares
of
wide-moat
Apple (AAPL) to
$185
from
$170
after
raising
our
medium-term
iPhone
revenue
forecast.
We
continue
to
expect
strong
revenue
growth
in
fiscal
2025
as
users
upgrade
their
iPhones
to
take
advantage
of
Apple’s
generative
artificial
intelligence
features,
requiring
the
latest
and
greatest
hardware.
• Fair
Value
Estimate:
$185
• Morningstar
Rating:
2
stars
• Morningstar
Economic
Moat
Rating:
Wide
• Morningstar
Uncertainty
Rating:
Medium
What
We
Thought
of
Apple’s
Earnings
We
now
forecast
double-digit
iPhone
revenue
growth
in
fiscal
2025
and
another
strong
year
of
revenue
growth
in
fiscal
2026.
IPhone
revenue
remains
the
primary
driver
of
Apple’s
results.
We
see
it
as
the
linchpin
to
the
firm’s
walled
garden
ecosystem
of
hardware,
software,
and
services,
which
underpins
our
wide
moat
rating
and
long-term
growth
thesis.
However,
we
continue
to
see
shares
as
overvalued.
Apple’s
current
stock
price
implies
closer
to
20%
iPhone
revenue
growth
in
fiscal
2025,
which
we
see
as
lofty
given
headwinds
to
growth
in
China
and
slowing
consumer
phone
upgrade
cycles.
Apple
iPhone
16
Coming
in
Q3
September-quarter
guidance
implies
roughly
5%
year-over-year
revenue
growth,
inclusive
of
double-digit
services
revenue
growth.
To
meet
this
guidance,
we
expect
iPhone
revenue
to
rise
in
the
low-single
digits.
We
expect
the
release
of
Apple’s
iPhone
16
lineup
to
occur
in
September
and
drive
stronger
growth
in
fiscal
2025,
which
starts
in
October.
In
our
view,
the
firm’s
suite
of
generative-AI
features,
dubbed
Apple
Intelligence
and
announced
in
early
June,
should
drive
consumers
to
upgrade
to
new
models.
Apple
Intelligence
requires
greater
memory
chip
content,
currently
only
available
on
the
iPhone
15
Pro
and
15
Pro
Max
models.
We
expect
sufficient
memory
content
for
Apple
Intelligence
across
the
iPhone
16
lineup,
which
should
also
uplift
pricing.
Our
expectations
for
greater
unit
sales
and
higher
pricing
drive
our
optimistic
expectations
for
double-digit
iPhone
revenue
growth
in
fiscal
2025.
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