November 4, 2026·40 min read
Apple Inc. (AAPL), Financial Analysis
Insights derived from analysing SEC filings. Independent analysis, not a publication of the SEC.
Total net sales Q4 FY2026
$114.5bn
+11.7% year on year (Q4 FY2025 $102.5bn)
Cost of sales and operating expenses Q4 FY2026
$78.8bn
+12.6% year on year (Q4 FY2025 $70.0bn)
Operating margin Q4 FY2026
31.1%
(0.5 pts) year on year (Q4 FY2025 31.6%)
Key findings
- FY2026 net sales $478.8bn, +15.1%, and Q4 FY2026 $114.5bn, +11.7%: Q4 operating margin 31.1% against 31.6% a year earlier as R&D rose 32.3%; diluted EPS $2.10 against $1.85; FY2026 EPS $8.98, +20.4%.
- iPhone $254.1bn in FY2026, +21.2%, 53.1% of net sales; Q4 $57.6bn, +17.5%. Greater China $82.4bn, +28.0%, after declines in FY2023 to FY2025; Q4 +21.0%.
- Services $123.3bn, +13.0%, with a 76.2% gross margin against 39.3% for products; Q4 growth 9.8%, the lowest of the four FY2026 quarters. The 10-K names the appeal of US antitrust remedies as a risk to search licensing revenue from Google.
- Tariff refunds and memory costs move products margin: Q4 products gross margin 37.2% incl. about 1 point of refunds, after 40.1% in Q3 incl. about 2 points; the 10-K expects memory and storage cost pressure to intensify. Manufacturing purchase obligations $89.7bn against $57.0bn at Jun 2026; inventory $14.5bn against $5.7bn.
- AI spending shows in R&D and licences: R&D $45.8bn, +32.5%, 9.6% of net sales; licensed intangible assets $29.6bn gross against $16.1bn (+84.2%); capex $9.0bn against $12.7bn. The 10-K adds a standalone AI risk factor: 28 factors against 27, 11 reworded.
- John Ternus became CEO on 1 Sep 2026; insiders sold about $209.1m in twelve months with no open market purchases. Shares $331.13 in pre market trade on 4 Nov 2026, 36.9x FY2026 EPS. Scenario values for FY2029: base $308, best $438, worst $166.
Figures are read from the Forms 10-K for FY2023 to FY2026 (FY2026 filed 3 Nov 2026), the Forms 10-Q for Q1 FY2026 to Q3 FY2026, the Forms 8-K with all their exhibits, incl. the quarterly earnings releases (Ex 99.1) with the CEO and CFO statements they contain (Apple files no separate CFO commentary document), the director stock plan and award agreement (Ex 10.1, 10.2) and the Item 5.02 and 5.07 filings, the proxy statement of 8 Jan 2026, Schedules 13G, Forms 13F and Forms 4 on the record for central index key 320193, the Q4 FY2026 earnings call held by the company on 2 Nov 2026 (outlook figures labelled as stated on the call), together with the Forms 10-K, 10-Q, 8-K and 6-K of Alphabet, Amazon, Microsoft, Meta, Netflix, Spotify, Qualcomm, Micron, Arm, HP, Dell, Intel and AMD. Apple's fiscal year ends on the last Saturday of September; Q4 FY2026 is the 13 weeks to 26 Sep 2026, and TTM equals FY2026. Accession numbers appear in the Sources appendix. Share prices are labelled with their date and time of trade.
1 Revenue & Business Model
- Storyline: iPhone and Greater China drove a 15.1% rise in FY2026 net sales, while memory costs, AI spending and slower Services growth set the margin outlook into FY2027. Chapters 2 to 4 cover the revenue drivers: iPhone and Greater China; Services incl. Google search payments; Mac, iPad and Wearables.
- Products and Services: products $355.5bn (74.2% of FY2026 net sales) at a 39.3% gross margin; Services $123.3bn (25.8%) at 76.2%. Services gave 40.2% of gross profit against 42.2% in FY2025, as products margin rose more.
- Net sales FY2022 $394.3bn to FY2026 $478.8bn, a 5.0% CAGR; Services grew at a 12.1% CAGR, iPhone 5.5%, Mac (1.4%), iPad (1.2%) and Wearables, Home and Accessories (3.6%).
- Five geographic reportable segments, FY2026: Americas $198.1bn (41.4%), Europe $127.6bn (26.6%), Greater China $82.4bn (17.2%), Rest of Asia Pacific $39.9bn and Japan $30.9bn. Segment operating income excludes R&D and general and administrative costs, which were ($54.4bn) at corporate level.
- Distribution and scale: indirect channels (carriers, wholesalers, retailers, resellers) took about 60% of FY2026 net sales; about 167,000 full time equivalent employees; the installed base passed 2.5bn active devices (8-K Ex 99.1, 29 Jan 2026) and reached a new all time high in every major product category and geographic segment in Q4 FY2026. Hardware is made mainly by outsourcing partners in China mainland, India, Japan, South Korea, Taiwan and Vietnam.
Table 1.1 Net sales by category, FY2022 to FY2026
| Category | FY2022 | FY2023 | FY2024 | FY2025 | FY2026 | FY2026 change (%) |
|---|---|---|---|---|---|---|
| iPhone ($bn) | 205.5 | 200.6 | 201.2 | 209.6 | 254.1 | +21.2 |
| Mac ($bn) | 40.2 | 29.4 | 30.0 | 33.7 | 37.9 | +12.5 |
| iPad ($bn) | 29.3 | 28.3 | 26.7 | 28.0 | 27.9 | (0.3) |
| Wearables, Home and Accessories ($bn) | 41.2 | 39.8 | 37.0 | 35.7 | 35.6 | (0.3) |
| Services ($bn) | 78.1 | 85.2 | 96.2 | 109.2 | 123.3 | +13.0 |
| Total net sales ($bn) | 394.3 | 383.3 | 391.0 | 416.2 | 478.8 | +15.1 |
| iPhone share of net sales (%) | 52.1 | 52.3 | 51.4 | 50.4 | 53.1 | |
| Services share of net sales (%) | 19.8 | 22.2 | 24.6 | 26.2 | 25.8 |
FY2023 had 53 weeks; all other years 52 weeks. Categories as disclosed in the revenue note of the Form 10-K.
Table 1.2 Reportable segments: net sales and operating income, FY2026 and Q4 FY2026
| Segment | FY2026 net sales ($bn) | Share (%) | Change (%) | Operating income ($bn) | Margin FY2026 (%) | Margin FY2025 (%) | Q4 FY2026 ($bn) | Q4 change (%) |
|---|---|---|---|---|---|---|---|---|
| Americas | 198.1 | 41.4 | +11.1 | 86.0 | 43.4 | 40.6 | 48.7 | +10.2 |
| Europe | 127.6 | 26.6 | +14.9 | 58.1 | 45.5 | 43.0 | 32.0 | +11.5 |
| Greater China | 82.4 | 17.2 | +28.0 | 35.3 | 42.9 | 41.8 | 17.5 | +21.0 |
| Japan | 30.9 | 6.5 | +7.7 | 14.7 | 47.4 | 48.6 | 6.5 | (1.4) |
| Rest of Asia Pacific | 39.9 | 8.3 | +18.3 | 18.4 | 46.1 | 43.3 | 9.7 | +15.0 |
Segment operating income excludes R&D and general and administrative expense. Greater China includes mainland China, Hong Kong and Taiwan.
2 iPhone and Greater China: Record Year as Memory Costs Rise
- iPhone $57.6bn in Q4 FY2026, +17.5%, 50.3% of net sales, a September quarter record; growth in the four FY2026 quarters was 23.3%, 21.7%, 21.7%, 17.5%.
- FY2026 iPhone $254.1bn, +21.2%, after +4.2% in FY2025 and +0.3% in FY2024; the 10-K attributes the rise to Pro models. The Q4 release names iPhone Duo, iPhone 18 Pro and iPhone 18 Pro Max as new models.
- Greater China $82.4bn in FY2026, +28.0%, against $74.2bn in FY2022 and $64.4bn in FY2025; segment margin 42.9%. Quarterly growth: Q1 FY2026 +37.9%, Q2 FY2026 +28.1%, Q3 FY2026 +22.4%, Q4 FY2026 +21.0%.
- Products gross margin by quarter: Q1 FY2026 40.7%, Q2 FY2026 38.7%, Q3 FY2026 40.1%, Q4 FY2026 37.2%; Q3 and Q4 include tariff refunds of about 2 and 1 points of company gross margin.
How the smartphone industry is changing
- Memory costs: Apple's 10-K reports supply constraints and rising costs for advanced semiconductors, memory and storage driven by industry wide supply and demand imbalances, and expects the trend to intensify for memory and storage; the components risk factor grew from 281 to 652 words.
- Memory suppliers: Micron Mobile and Client Business Unit revenue was $13.1bn in the quarter to 3 Sep 2026, +248.8%, with a unit operating margin of 88% (Micron 8-K Ex 99.1, 30 Sep 2026).
- Handset chips: Qualcomm QCT handsets revenue fell 19.6% to $5.09bn in the Jun 2026 quarter; its release cites the memory and supply environment and price increases to offset higher input costs (8-K Ex 99.1, 29 Jul 2026).
- Tariffs: refunds after the 20 Feb 2026 Supreme Court ruling on IEEPA tariffs lowered products cost of sales in Q3 and Q4 FY2026; new Section 301 tariffs were recently imposed (10-K).
- Competitors without SEC filings: Samsung, Xiaomi and other Android handset makers do not file with the SEC, so their figures are not shown; the 10-K states that Apple holds a minority share of the global smartphone market.
Table 2.1 Smartphone value chain compared, latest reported quarter
| Company and line | Period | Revenue | Growth (%) | Business |
|---|---|---|---|---|
| Apple iPhone | Sep 2026 quarter | $57.6bn | +17.5 | Smartphones |
| Alphabet subscriptions, platforms and devices | Q3 2026 | $14.29bn | +11.0 | Pixel, Google Play, subscriptions |
| Qualcomm QCT handsets | Jun 2026 quarter | $5.09bn | (19.6) | Smartphone chips |
| Micron Mobile and Client Business Unit | quarter to 3 Sep 2026 | $13.11bn | +248.8 | Memory for phones and PCs |
| Arm royalty revenue | Jun 2026 quarter | $715m | +22.2 | Chip design royalties |
Alphabet from its Form 10-Q of 28 Oct 2026 (Pixel hardware not reported separately); Qualcomm from its Form 8-K of 29 Jul 2026 (Sep 2026 quarter not yet reported); Micron from its Form 8-K of 30 Sep 2026; Arm from its Form 6-K of 29 Jul 2026.
Table 2.2 iPhone, Greater China and products gross margin, last five quarters
| Line | Q4 FY2025 | Q1 FY2026 | Q2 FY2026 | Q3 FY2026 | Q4 FY2026 | Change year on year (%) |
|---|---|---|---|---|---|---|
| iPhone ($bn) | 49.0 | 85.3 | 57.0 | 54.3 | 57.6 | +17.5 |
| iPhone share of net sales (%) | 47.8 | 59.3 | 51.3 | 49.6 | 50.3 | |
| Greater China ($bn) | 14.5 | 25.5 | 20.5 | 18.8 | 17.5 | +21.0 |
| Products gross margin (%) | 36.2 | 40.7 | 38.7 | 40.1 | 37.2 |
3 Services: $123bn at 76% Gross Margin, Growth Slows to 9.8%
- Services $31.6bn in Q4 FY2026, +9.8%, 27.6% of net sales, an all time high; growth by FY2026 quarter 13.9%, 16.3%, 12.1%, 9.8%.
- FY2026 Services $123.3bn, +13.0%, mainly from advertising and cloud services (10-K); gross profit $93.9bn, +14.1%, at a 76.2% margin against 75.4%.
- Google search payments: Apple earns revenue from licensing arrangements with Google and others to offer search on its platforms; the 10-K does not state the amount and the gross margin risk factor names third party licensing arrangements as a large contributor to results of operations.
- Siri AI in the revenue model: services bundled with iPhone, Mac and iPad now include Siri and Siri AI, with revenue deferred and recognized over time (10-K revenue note); Siri AI was introduced at WWDC26 and launched with the new product lineup (8-K Ex 99.1, 30 Jul and 2 Nov 2026).
How digital services are changing
- Search distribution: a US court found in Aug 2024 that Google violated antitrust law; remedies ordered on 2 Sep 2025 are under appeal by DOJ and Google, and a reversal could bar Google from offering Apple commercial terms for search distribution (Apple 10-K). Alphabet traffic acquisition costs, which include payments to distribution partners, were $16.4bn in Q3 2026, +10% (Alphabet 10-Q).
- App Store rules: the Supreme Court granted Apple's petition on the civil contempt standard in the Epic Games case on 30 Jun 2026, and the risk factors add that developers using alternative distribution and payment may cut or remove Apple's commission; the EU fined Apple EUR 500m under the DMA in Apr 2025.
- Peer growth in the latest quarter: Spotify +16.3% (EUR), Netflix +11.8%, Amazon subscriptions +11.4%, Alphabet subscriptions, platforms and devices +11.0% and Microsoft search and advertising +10.3%, against Apple Services +9.8%.
- Margins: Apple Services gross margin of 76.0% in Q4 compares with operating margins of 34.6% at Netflix and 13.5% at Spotify; the measures differ, as Apple does not report Services operating income.
Table 3.1 Digital services compared, latest reported quarter
| Company and line | Period | Revenue | Growth (%) | Margin (%) | Main products |
|---|---|---|---|---|---|
| Apple Services | Sep 2026 quarter | $31.6bn | +9.8 | 76.0 (gross) | App Store, advertising, cloud, AppleCare, payments |
| Alphabet subscriptions, platforms and devices | Q3 2026 | $14.29bn | +11.0 | n/a | YouTube, Google Play, Pixel |
| Amazon subscription services | Q3 2026 | $14.01bn | +11.4 | n/a | Prime and other subscriptions |
| Netflix revenue | Q3 2026 | $12.87bn | +11.8 | 34.6 | Streaming |
| Spotify total revenue (EUR) | Q3 2026 | EUR 4.97bn | +16.3 | 13.5 | Audio streaming |
| Microsoft search and advertising | Sep 2026 quarter (Q1 FY2027) | $6.55bn | +10.3 | n/a | Bing and other search |
Margin is gross margin for Apple and operating margin for Netflix and Spotify; other peers do not report a margin for these lines. Spotify reports in EUR. Peer figures from their Forms 10-Q, 8-K and 6-K for Q3 2026.
4 Mac, iPad and Wearables: Mac Up 23.7% as PC Peers Report Memory Pressure
- Mac $10.79bn in Q4 FY2026, +23.7%, after +28.7% in Q3; FY2026 $37.9bn, +12.5%, from laptops (10-K). MacBook Neo launched in the Mar 2026 quarter (8-K Ex 99.1, 30 Apr 2026); the Q4 release names Touch on Mac.
- iPad $6.23bn, (10.4)%, the second consecutive quarterly decline; FY2026 $27.9bn, (0.3)%.
- Wearables, Home and Accessories $8.30bn, (7.9)%; FY2026 $35.6bn, (0.3)%, the fourth annual decline from $41.2bn in FY2022. The Q4 release names new home hardware, and the 10-K lists the Apple HomeView display.
- Combined: the three categories were $101.4bn, 21.2% of FY2026 net sales, against 28.1% in FY2022.
How personal computing is changing
- Memory prices reach PC demand: Intel's Form 10-Q states that client demand declined in Q3 2026 on higher component prices, particularly memory, and expects these trends to worsen in Q4 2026.
- Revenue up on price: HP Personal Systems revenue rose 18.5% in the Jul 2026 quarter while units fell 16% (HP 8-K); Dell Client Solutions Group rose 20.2% with commercial client +22% (Dell 8-K).
- Chip suppliers: AMD Client revenue +7.2% in Q3 2026; Intel Client Computing and Physical AI (5.1)% at a 28% segment margin.
- Wearables: no SEC filer reports a comparable wearables line; Lenovo, Samsung and Xiaomi do not file with the SEC.
Table 4.1 Personal computing compared, latest reported quarter
| Company and line | Period | Revenue | Growth (%) | Operating margin (%) |
|---|---|---|---|---|
| Apple Mac | Sep 2026 quarter | $10.79bn | +23.7 | n/a |
| Dell Client Solutions Group | Jul 2026 quarter (Q2 FY2027) | $15.03bn | +20.2 | 7.6 |
| HP Personal Systems | Jul 2026 quarter (Q3 FY2026) | $11.77bn | +18.5 | 4.6 |
| Intel Client Computing and Physical AI | Q3 2026 (Sep 2026 quarter) | $8.10bn | (5.1) | 28.0 |
| AMD Client | Q3 2026 | $2.95bn | +7.2 | 15.0 |
| Apple iPad | Sep 2026 quarter | $6.23bn | (10.4) | n/a |
| Apple Wearables, Home and Accessories | Sep 2026 quarter | $8.30bn | (7.9) | n/a |
HP and Dell from their Forms 8-K for the Jul 2026 quarter; Intel from its Form 10-Q and AMD from its Form 8-K for Q3 2026. AMD margin is for its Client and Gaming segment. Apple does not report operating income by product category.
5 Financial Analysis & Ratios
- Operating margin 33.0% in FY2026 against 32.0% in FY2025; gross margin 48.8% against 46.9%, with tariff refunds booked against products cost of sales in Q3 and Q4. Operating expenses $75.5bn, +21.5%.
- Net income $132.2bn, +18.0%; effective tax rate 17.0% against 15.6%, higher mainly on a higher rate on foreign earnings, US Treasury foreign currency loss regulations and the tax effect of Q1 FY2025 currency revaluations tied to the EU State Aid Decision (10-K). FY2024 carried a one time net tax charge of $10.2bn.
- Operating cash flow $145.1bn (+30.2%) and free cash flow $136.1bn (+37.8%), 28.4% of net sales, after the final $8.8bn of the deemed repatriation tax paid in the first nine months.
- Balance sheet at 26 Sep 2026: cash and marketable securities $136.9bn against term debt and commercial paper of $80.1bn, net cash $56.8bn; no term debt issued in FY2026 and $12.4bn repaid. Retained earnings turned positive at $13.7bn.
- Capital returns $102.1bn, 75.1% of free cash flow: buybacks $86.4bn (296.7m shares) and dividends $15.7bn. Shares outstanding fell to 14.53bn from 14.77bn; $14.0bn remained on the May 2025 program plus the $100bn program of Apr 2026.
Table 5.1 Income statement, cash flow and balance sheet summary ($bn unless stated)
| Line item | FY2022 | FY2023 | FY2024 | FY2025 | FY2026 |
|---|---|---|---|---|---|
| Revenue | 394.3 | 383.3 | 391.0 | 416.2 | 478.8 |
| Gross profit | 170.8 | 169.1 | 180.7 | 195.2 | 233.6 |
| Research and development | 26.3 | 29.9 | 31.4 | 34.6 | 45.8 |
| Selling, general and administrative | 25.1 | 24.9 | 26.1 | 27.6 | 29.8 |
| Operating income | 119.4 | 114.3 | 123.2 | 133.1 | 158.1 |
| Net income | 99.8 | 97.0 | 93.7 | 112.0 | 132.2 |
| Diluted EPS ($) | 6.11 | 6.13 | 6.08 | 7.46 | 8.98 |
| Operating cash flow | 122.2 | 110.5 | 118.3 | 111.5 | 145.1 |
| Capital expenditure | (10.7) | (11.0) | (9.4) | (12.7) | (9.0) |
| Free cash flow | 111.4 | 99.6 | 108.8 | 98.8 | 136.1 |
| Stock based compensation | 9.0 | 10.8 | 11.7 | 12.9 | 13.8 |
| Cash and investments | 169.1 | 162.1 | 156.7 | 132.4 | 136.9 |
| Total debt | 120.1 | 111.1 | 106.6 | 98.7 | 80.1 |
| Total equity | 50.7 | 62.1 | 57.0 | 73.7 | 112.1 |
Fiscal years end on the last Saturday of September; FY2023 had 53 weeks. Capital expenditure is payments for property, plant and equipment; free cash flow is operating cash flow less capital expenditure. Total debt is commercial paper plus term debt at carrying value and excludes leases. TTM equals FY2026.
Table 5.2 What changed, Q4 FY2026 against Q4 FY2025
| Metric | Q4 FY2025 | Q4 FY2026 | Change |
|---|---|---|---|
| Revenue ($bn) | 102.47 | 114.48 | 11.7% |
| Gross profit ($bn) | 48.34 | 54.82 | 13.4% |
| Operating income ($bn) | 32.43 | 35.63 | 9.9% |
| Net income ($bn) | 27.47 | 30.71 | 11.8% |
| Diluted EPS ($) | 1.85 | 2.10 | 13.5% |
| Operating cash flow ($bn) | 29.73 | 28.10 | (5.5%) |
| Free cash flow ($bn) | 26.49 | 25.86 | (2.4%) |
| Operating margin (%) | 31.6 | 31.1 | (0.5 pts) |
| Net margin (%) | 26.8 | 26.8 | 0.0 pts |
Table 5.3 Ratio analysis
| Ratio | FY2022 | FY2023 | FY2024 | FY2025 | FY2026 |
|---|---|---|---|---|---|
| Growth and margins | |||||
| Revenue growth (%) | n/a | (2.8) | 2.0 | 6.4 | 15.1 |
| Gross margin (%) | 43.3 | 44.1 | 46.2 | 46.9 | 48.8 |
| Operating margin (%) | 30.3 | 29.8 | 31.5 | 32.0 | 33.0 |
| Net margin (%) | 25.3 | 25.3 | 24.0 | 26.9 | 27.6 |
| FCF margin (%) | 28.3 | 26.0 | 27.8 | 23.7 | 28.4 |
| Cost and investment intensity | |||||
| R&D (%) revenue | 6.7 | 7.8 | 8.0 | 8.3 | 9.6 |
| SBC (%) revenue | 2.3 | 2.8 | 3.0 | 3.1 | 2.9 |
| Capex (%) revenue | 2.7 | 2.9 | 2.4 | 3.1 | 1.9 |
| Effective tax rate (%) | 16.2 | 14.7 | 24.1 | 15.6 | 17.0 |
| Returns | |||||
| ROE (%) | 197.0 | 171.9 | 157.4 | 171.4 | 142.3 |
| ROA (%) | 28.3 | 27.5 | 26.1 | 30.9 | 34.6 |
| Asset turnover (x) | 1.12 | 1.09 | 1.07 | 1.16 | 1.18 |
| Liquidity and leverage | |||||
| Current ratio (x) | 0.88 | 0.99 | 0.87 | 0.89 | 1.02 |
| Debt to equity (x) | 2.37 | 1.79 | 1.87 | 1.34 | 0.71 |
| Net cash ($bn) | 49.0 | 51.0 | 50.0 | 33.8 | 56.8 |
| Efficiency and cash quality | |||||
| Days sales outstanding | 26 | 28 | 31 | 35 | 33 |
| Inventory days | 8 | 11 | 13 | 9 | 22 |
| FCF to net income (x) | 1.12 | 1.03 | 1.16 | 0.88 | 1.03 |
| Shareholder returns (%) FCF | 94 | 93 | 101 | 107 | 75 |
ROE and ROA use average balances; TTM equals FY2026 and is not shown separately. ROIC is omitted because net cash leaves invested capital close to zero. Apple has not disclosed interest expense separately since FY2023. FY2024 net margin and tax rate include the $10.2bn EU State Aid charge.
Table 5.4 Valuation snapshot at $331.13 per share, pre market trade of 4 Nov 2026
| Measure | Value |
|---|---|
| Market cap ($bn) | 4,812.0 |
| Enterprise value ($bn) | 4,755.2 |
| P/E (TTM) (x) | 36.9 |
| EV/Sales (TTM) (x) | 9.9 |
| EV/EBITDA (TTM) (x) | 27.7 |
| FCF yield (%) | 2.8 |
| Price/Book (x) | 42.9 |
Cost structure and profitability
- Cost of sales 52.1% of Q4 FY2026 net sales against 52.8% a year earlier; costs incl. operating expenses $78.8bn, +12.6%, against net sales +11.7%.
- R&D $11.7bn in Q4, +32.3%, 10.2% of net sales against 8.7%; the 10-K links the FY2026 rise to AI infrastructure and headcount. SG&A $7.5bn, +5.8%, 6.5% of net sales.
- Gross profit mix: Services 40.2% of FY2026 gross profit on 25.8% of net sales; products gross margin 39.3% against 36.8%, Services 76.2% against 75.4%.
- Depreciation and amortization $13.4bn in FY2026 (+14.7%), of which $4.9bn intangible amortization against $3.7bn, expected at $6.6bn in FY2027; PP&E depreciation $8.7bn.
- Capex $9.0bn, 1.9% of net sales, against $12.7bn; part of AI compute runs through third party cloud capacity and purchase obligations.
- Capital returns $28.2bn in Q4 against free cash flow of $25.9bn: buybacks $24.3bn and dividends $3.9bn.
Table 5.5 Costs and margins, last five quarters
| Line | Q4 FY2025 | Q1 FY2026 | Q2 FY2026 | Q3 FY2026 | Q4 FY2026 |
|---|---|---|---|---|---|
| Cost of sales (% of net sales) | 52.8 | 51.8 | 50.7 | 49.9 | 52.1 |
| Research and development (% of net sales) | 8.7 | 7.6 | 10.3 | 10.7 | 10.2 |
| Selling, general and administrative (% of net sales) | 6.9 | 5.2 | 6.7 | 6.7 | 6.5 |
| Depreciation and amortization (incl. in lines above) (% of net sales) | 3.1 | 2.2 | 3.1 | 3.0 | 3.0 |
| Stock based compensation (incl. in lines above) (% of net sales) | 3.1 | 2.5 | 3.2 | 3.1 | 2.9 |
| Operating income (% of net sales) | 31.6 | 35.4 | 32.3 | 32.6 | 31.1 |
| Products gross margin (%) | 36.2 | 40.7 | 38.7 | 40.1 | 37.2 |
| Services gross margin (%) | 75.3 | 76.5 | 76.7 | 75.6 | 76.0 |
| Capex (% of net sales) | 3.2 | 1.7 | 1.8 | 2.2 | 2.0 |
| Effective tax rate (%) | 16.3 | 17.5 | 17.5 | 17.9 | 15.0 |
6 MD&A & Management Commentary
Q4 FY2026 results release, Form 10-K and earnings call
- Q4 FY2026 (8-K of 2 Nov 2026): net sales $114.5bn, a September quarter record; products $82.9bn (+12.5%), Services $31.6bn (+9.8%), an all time high; net income $30.7bn; diluted EPS $2.10 (+13.5%) incl. $0.05 from tariff refunds.
- Gross margin 47.9% in Q4 against 50.1% in Q3: the tariff refund effect fell from about 2 points to about 1 point; products 37.2% against 40.1%, Services 76.0% against 75.6%. Refund amounts in dollars are not disclosed.
- MD&A on FY2026 (10-K): iPhone growth from Pro models; Mac growth from laptops; iPad and Wearables flat; Services growth mainly from advertising and cloud services. Greater China rose with a stronger renminbi; Japan rose 8% despite a weaker yen. Products gross margin rose on mix and tariff refunds, partly offset by memory costs.
- Tariffs (10-K): the Supreme Court struck down the IEEPA tariffs on 20 Feb 2026; Apple applied for refunds and records them as a reduction of products cost of sales. The Section 232 semiconductor review of 14 Jan 2026 imposed no new tariffs on Apple products; new Section 301 tariffs were recently imposed.
- Q1 FY2027 outlook, stated by management on the Q4 FY2026 earnings call (2 Nov 2026): revenue growth of 7% to 10% against Q1 FY2026 net sales of $143.8bn; gross margin of 45% to 46% against 48.2% in Q1 FY2026 and 47.9% in Q4 FY2026; operating expenses of $20.4bn to $20.8bn against $18.4bn; tax rate of about 17%. The earnings release and the 10-K contain no numeric outlook.
- Outlook in the 10-K: gross margins are subject to volatility and downward pressure, and memory and storage cost trends are expected to intensify. Other points from the 2 Nov 2026 call are used only where the Form 8-K exhibits or the 10-K repeat them, incl. the tariff refund effects, the product launches and the rise in purchase obligations.
Table 6.1 Q1 FY2027 outlook stated on the Q4 FY2026 earnings call and forward statements in the Forms 8-K and 10-K
| Item | Outlook | Source |
|---|---|---|
| Q1 FY2027 revenue | growth of 7% to 10% (Q1 FY2026 net sales $143.8bn) | stated by management on the Q4 FY2026 earnings call, 2 Nov 2026 |
| Q1 FY2027 gross margin | 45% to 46% (Q1 FY2026 48.2%; Q4 FY2026 47.9%) | stated by management on the Q4 FY2026 earnings call, 2 Nov 2026 |
| Q1 FY2027 operating expenses | $20.4bn to $20.8bn (Q1 FY2026 $18.4bn) | stated by management on the Q4 FY2026 earnings call, 2 Nov 2026 |
| Q1 FY2027 tax rate | about 17% (Q1 FY2026 17.5%) | stated by management on the Q4 FY2026 earnings call, 2 Nov 2026 |
| Gross margins | subject to volatility and downward pressure | 10-K FY2026, Item 7 |
| Memory and storage costs | supply constraints and rising costs expected to intensify | 10-K FY2026, Items 1 and 1A |
| Intangible amortization | $6.6bn in FY2027, $6.0bn in FY2028, $5.5bn in FY2029 (FY2026 $4.9bn) | 10-K FY2026, intangible assets note |
| Manufacturing purchase obligations | $89.7bn at 26 Sep 2026, of which $82.7bn due within 12 months | 10-K FY2026, Item 7 |
| Term debt maturities | $9.99bn in FY2027, $9.30bn in FY2028 | 10-K FY2026, debt note |
| Dividend | $0.27 per share payable 16 Nov 2026; raised 4% in Apr 2026 | 8-K Ex 99.1, 30 Apr and 2 Nov 2026 |
| Share repurchases | additional $100bn program (Apr 2026); $14.0bn left on the May 2025 program | 8-K Ex 99.1, 30 Apr 2026; 10-K Item 5 |
Management and CFO commentary
- CEO John Ternus, 8-K Ex 99.1 of 2 Nov 2026: September quarter records for revenue and iPhone, an all time high for Services; new lineup of iPhone Duo, iPhone 18 Pro and Pro Max, home hardware, Touch on Mac and Siri AI.
- CFO Kevan Parekh, 8-K Ex 99.1 of 2 Nov 2026: September quarter records for net income and EPS; $28bn of operating cash flow and $28bn returned to shareholders; installed base at an all time high in every major product category and geographic segment.
- CEO Tim Cook, 8-K Ex 99.1 of 30 Jul 2026: double digit growth in iPhone, Mac and Services and in every geographic segment; Siri AI introduced at WWDC26.
- CEO, 8-K Ex 99.1 of 30 Apr 2026: March quarter iPhone record; iPhone 17e, iPad Air and MacBook Neo introduced; CFO: operating cash flow above $28bn.
- CEO, 8-K Ex 99.1 of 29 Jan 2026: all time records for revenue and EPS; iPhone records in every geographic segment; installed base above 2.5bn active devices. CFO: nearly $54bn of operating cash flow and almost $32bn returned.
- CFO commentary: Apple files no separate CFO commentary; the CFO statements above are those in the earnings releases.
Table 6.2 Management statements in their own words
| Speaker | Date and source | Statement |
|---|---|---|
| Tim Cook, CEO | 30 Jul 2026, 8-K Ex 99.1 | “our strongest June quarter ever” |
| John Ternus, CEO | 2 Nov 2026, 8-K Ex 99.1 | “the most transformational iPhone since the original” |
Table 6.3 Key disclosures in the Form 10-K for FY2026
| Item | Disclosure |
|---|---|
| Item 1, supply | Supply constraints and rising costs for advanced semiconductors, memory and storage; new text on dependence on compute capacity for AI, reliance on third party cloud providers and data center limits (power, water, land, permitting). |
| Intangible assets note | Licensed intangible assets gross $29.6bn against $16.1bn; net $20.9bn against $9.2bn; total net intangibles $25.7bn incl. $5.4bn current. The filing does not name the licensors. |
| Balance sheet | Inventory $14.5bn against $5.7bn; vendor non trade receivables $39.9bn; accounts payable $82.3bn. |
| Revenue note | Services bundled with iPhone, Mac and iPad now include Siri and Siri AI with iCloud and Maps, deferred and recognized straight line; $8.7bn of opening deferred revenue recognized in FY2026. |
| Capex and cloud | Capex $9.0bn against $12.7bn; Apple relies partly on third party cloud capacity for AI; other purchase obligations $27.3bn. |
| Segments | Greater China segment margin 42.9% against 41.8%; corporate R&D and general and administrative costs ($54.4bn). |
| Item 3, legal | EU DMA fine of EUR 500m (Apr 2025, appealed); DOJ smartphone antitrust suit pending; Epic Games: Supreme Court granted Apple's petition on the civil contempt standard on 30 Jun 2026. |
| Item 5, buybacks and returns | Q4 repurchases 81.8m shares, incl. 6.3m final shares of the $10.0bn May 2026 accelerated programs; 21,458 holders of record; $100 invested in Sep 2021 worth $238 in Sep 2026 against $187 for the S&P 500. |
7 Peer Valuation & Sector Summary
- Sector: consumer hardware and digital services. Apple TTM net sales $478.8bn against Amazon $797.5bn, Alphabet $471.1bn, Microsoft $346.4bn and Meta $241.6bn.
- Growth: AAPL +11.7% in Q4 FY2026 (+15.1% FY2026) against META +26.1%, GOOGL +24.7%, MSFT +18.8% and AMZN +12.1%.
- Margins: AAPL operating margin 33.0% against MSFT 47.1%, GOOGL 33.3%, META 32.9% and AMZN 13.1%; AAPL free cash flow margin 28.4%, the highest in the set.
- Valuation: AAPL 36.9x P/E and 9.9x EV/Sales against MSFT 27.2x and 11.1x, META 21.7x and 6.8x, AMZN 19.3x and 3.3x, and GOOGL 15.1x (incl. equity gains) and 7.2x.
- Balance sheet: AAPL net cash $56.8bn against GOOGL $139.0bn and MSFT $29.0bn; AMZN net debt $66.1bn.
Table 7.1 Peer comparison, latest reported trailing twelve months
| Company | Revenue TTM ($bn) | Revenue growth (%) | Gross margin (%) | Operating margin (%) | Net margin (%) | FCF margin (%) | ROE (%) | Net cash ($bn) | Market value ($bn) | EV/Sales (x) | P/E TTM (x) |
|---|---|---|---|---|---|---|---|---|---|---|---|
| AAPL | 478.8 | 11.7 | 48.8 | 33.0 | 27.6 | 28.4 | 142.3 | 56.8 | 4,812 | 9.9 | 36.9 |
| MSFT | 346.4 | 18.8 | 67.7 | 47.1 | 41.2 | 17.3 | 34.2 | 29.0 | 3,884 | 11.1 | 27.2 |
| GOOGL | 471.1 | 24.7 | 60.9 | 33.3 | 50.0 | 4.2 | 44.3 | 139.0 | 3,543 | 7.2 | 15.1 |
| AMZN | 797.5 | 12.1 | 51.4 | 13.1 | 16.9 | (5.3) | 26.3 | (66.1) | 2,599 | 3.3 | 19.3 |
| META | 241.6 | 26.1 | 81.0 | 32.9 | 31.1 | 10.4 | 32.3 | (1.2) | 1,636 | 6.8 | 21.7 |
AAPL FY2026 (52 weeks to 26 Sep 2026) equals TTM. Revenue growth is the Sep 2026 quarter against the Sep 2025 quarter for every company: AAPL Q4 FY2026 (FY2026 +15.1%), MSFT Q1 FY2027, GOOGL, AMZN and META Q3 2026; AAPL market value and P/E at $331.13, pre market trade of 4 Nov 2026. Peers TTM to Sep 2026 from their Forms 10-Q and 8-K, prices of 23 to 30 Oct 2026. Alphabet net income includes $129.6bn of pretax equity gains; Microsoft net income includes OpenAI related gains. Samsung, Xiaomi and Lenovo do not file with the SEC and are not included.
8 Material Events & Contracts
- Nine Forms 8-K and 8-K/A from 5 Dec 2025 to 2 Nov 2026: four earnings releases, four Item 5.02 filings on leadership and pay, and the Item 5.07 vote results with the director stock plan exhibits. No debt was issued in the period.
- Leadership change: the 8-K of 20 Apr 2026 named John Ternus CEO from 1 Sep 2026, with Tim Cook as Executive Chair and Art Levinson as Lead Independent Director; the 8-K/A of 1 Sep 2026 set Ternus's FY2027 equity target at $55m, 75% tied to relative TSR.
- Licences and commitments: licensed intangible assets rose 84.2% to $29.6bn gross; manufacturing purchase obligations rose $32.7bn in Q4 to $89.7bn.
Table 8.1 Forms 8-K filed in the last twelve months
| Date | Items | Event |
|---|---|---|
| 2 Nov 2026 | 2.02, 9.01 | Q4 FY2026 results (Ex 99.1): net sales $114.5bn (+11.7%); gross margin 47.9% incl. about 1 point from tariff refunds; diluted EPS $2.10 incl. $0.05 from tariff refunds; FY2026 net sales $478.8bn, EPS $8.98; dividend $0.27 payable 16 Nov 2026. First release under CEO John Ternus. |
| 1 Sep 2026 | 5.02 (8-K/A) | Pay terms for the leadership change: Ternus salary $3m, prorated RSU award $2.5m, FY2027 equity target $55m (75% performance RSUs on relative TSR against the S&P 500, 25% time based over four years); Cook salary as Executive Chair $2m from 26 Sep 2026, FY2027 equity target $45m (half performance, half time based). |
| 30 Jul 2026 | 2.02, 9.01 | Q3 FY2026 results (Ex 99.1): net sales $109.4bn (+16.4%); gross margin 50.1% incl. about 2 points from tariff refunds; diluted EPS $2.02 incl. $0.11 from tariff refunds; Siri AI introduced at WWDC26; dividend $0.27. |
| 30 Apr 2026 | 2.02, 9.01 | Q2 FY2026 results (Ex 99.1): net sales $111.2bn (+16.6%); diluted EPS $2.01; dividend raised 4% to $0.27; additional $100bn share repurchase program authorized. |
| 20 Apr 2026 | 5.02 | CEO succession: Tim Cook to become Executive Chair and John Ternus (50, SVP Hardware Engineering, at Apple since 2001) appointed CEO and director, effective 1 Sep 2026; Art Levinson moves from Chair to Lead Independent Director. |
| 24 Feb 2026 | 5.07, 9.01 | Annual meeting: eight directors elected, Ernst & Young ratified, say on pay approved; amended Non Employee Director Stock Plan approved (Ex 10.1) with a form of director RSU award agreement (Ex 10.2); China Entanglement Audit shareholder proposal rejected. |
| 29 Jan 2026 | 2.02, 9.01 | Q1 FY2026 results (Ex 99.1): net sales $143.8bn (+15.7%), an all time record; diluted EPS $2.84; iPhone $85.3bn; installed base above 2.5bn active devices; dividend $0.26. |
| 2 Jan 2026 | 5.02 | Ben Borders (45) appointed Principal Accounting Officer from 1 Jan 2026, succeeding Chris Kondo. |
| 5 Dec 2025 | 5.02 | Jennifer Newstead to become General Counsel on 1 Mar 2026; Kate Adams to oversee government affairs until her retirement in late 2026. |
Table 8.2 Material contracts and financing arrangements
| Contract | Terms |
|---|---|
| Term debt | $78.7bn principal of notes at 0.500% to 4.850% due 2026 to 2062, against $91.3bn a year earlier; fair value $64.0bn; future interest $34.4bn; $10.0bn due within 12 months. |
| Commercial paper | $2.0bn outstanding at 3.80% at 26 Sep 2026, against $8.0bn a year earlier. |
| Share repurchase programs | $100bn program authorized Apr 2026 plus $14.0bn left on the May 2025 program; $10.0bn of accelerated repurchases in May 2026 retired 33m shares at an average $305.29. |
| Manufacturing purchase obligations | $89.7bn at 26 Sep 2026 ($82.7bn within 12 months) against $57.0bn at 27 Jun 2026; other purchase obligations $27.3bn. |
| Licensed intangible assets | gross $29.6bn against $16.1bn; licensors not named in the filing; amortization of all intangibles $4.9bn in FY2026. |
| Leases | fixed lease payment obligations $17.8bn. |
| Non Employee Director Stock Plan (Ex 10.1) | restated 24 Feb 2026: 44.8m share limit, annual RSU grant of $310,000 per director, total annual director pay capped at $1.5m, plan ends 23 Feb 2036. |
| Search licensing with Google | revenue from licensing arrangements to offer search on Apple platforms; amounts not disclosed; subject to the appeal of the US antitrust remedies (10-K Item 1A). |
9 Ownership, Voting Power & Annual Meeting
- One class of common stock with one vote per share; no controlling holder. Vanguard Capital Management reported 7.48% (Schedule 13G, 31 Mar 2026) and BlackRock 7.10% (as of 31 Dec 2023, cited in the proxy); directors and executive officers held 9.1m shares, about 0.06%.
- 2026 annual meeting (24 Feb 2026): all eight directors elected, Art Levinson with the lowest support at 91.0% of votes cast; say on pay 91.4%; Ernst & Young ratified with 98.3%; the China Entanglement Audit proposal received 1.4%.
- Insiders, Nov 2025 to Oct 2026: no open market purchases; sales about $209.1m in 47 transactions by eight insiders, most under prearranged trading plans; shares withheld for tax on vesting about $173.4m. Art Levinson sold $86.7m in May 2026 and Tim Cook $80.4m.
- Pay: Tim Cook's FY2025 total compensation was $74.3m, 533 times the median employee at $139,483 (proxy). John Ternus's FY2027 equity target is $55m and Cook's $45m (8-K/A, 1 Sep 2026).
Table 9.1 Annual meeting vote results, 24 Feb 2026
| Proposal | For (bn votes) | Against (bn votes) | Abstain (bn votes) | For as % of votes cast | Result |
|---|---|---|---|---|---|
| Elect Wanda Austin | 9.078 | 0.041 | 0.018 | 99.6 | Elected |
| Elect Tim Cook | 9.022 | 0.101 | 0.013 | 98.9 | Elected |
| Elect Alex Gorsky | 9.001 | 0.118 | 0.017 | 98.7 | Elected |
| Elect Andrea Jung | 8.608 | 0.512 | 0.016 | 94.4 | Elected |
| Elect Art Levinson | 8.297 | 0.822 | 0.017 | 91.0 | Elected |
| Elect Monica Lozano | 9.077 | 0.042 | 0.017 | 99.5 | Elected |
| Elect Ron Sugar | 8.717 | 0.401 | 0.018 | 95.6 | Elected |
| Elect Sue Wagner | 8.596 | 0.523 | 0.017 | 94.3 | Elected |
| Ratify Ernst & Young as FY2026 auditor | 11.795 | 0.202 | 0.029 | 98.3 | Approved |
| Advisory vote on executive compensation | 8.304 | 0.782 | 0.051 | 91.4 | Approved |
| Approve Non Employee Director Stock Plan, as amended and restated | 8.927 | 0.179 | 0.030 | 98.0 | Approved |
| Shareholder proposal: China Entanglement Audit | 0.129 | 8.939 | 0.068 | 1.4 | Not approved |
Votes in billions as filed in the Form 8-K of 24 Feb 2026. For as % of votes cast excludes abstentions and broker non votes (2.89bn on each item except the auditor ratification).
2026 annual meeting and board
- Meeting of 24 Feb 2026: results filed under Item 5.07; no transcript of management remarks was filed.
- Director plan: the restated Non Employee Director Stock Plan passed with 98.0% of votes cast (Ex 10.1).
- Board roles from 1 Sep 2026: Tim Cook Executive Chair, Art Levinson Lead Independent Director, John Ternus joins as director.
- 2027 meeting: proxy statement not yet filed.
Table 9.2 Largest holders on the record
| Holder | Shares (m) | % of shares | As of | Filing |
|---|---|---|---|---|
| Vanguard Capital Management | 1,099.2 | 7.48 | 31 Mar 2026 | Schedule 13G |
| BlackRock | 1,043.7 | 7.10 | 31 Dec 2023 | Schedule 13G/A cited in the 2026 proxy |
| State Street | 615.1 | 4.2 | 30 Jun 2026 | Form 13F |
| Berkshire Hathaway | 227.9 | 1.6 | 30 Jun 2026 | Form 13F |
| Directors and executive officers (12 persons) | 9.1 | 0.06 | 2 Jan 2026 | Proxy statement |
Vanguard Group reported 1.42bn shares (9.63%) at 30 Jun 2025 in the proxy; in Mar 2026 it amended its filing to nil and Vanguard Capital Management filed a new Schedule 13G. Shares outstanding 14.53bn at 23 Oct 2026.
Table 9.3 Form 13F holdings, shares (m)
| Holder | Dec 2025 | Mar 2026 | Jun 2026 |
|---|---|---|---|
| State Street | 604.1 | 602.3 | 615.1 |
| Berkshire Hathaway | 227.9 | 227.9 | 227.9 |
| Vanguard Group | 1,426.3 | n/a | n/a |
Sep 2026 Forms 13F are due by 14 Nov 2026 and are not yet on the record; Vanguard Group 2026 Forms 13F were not found. The trend therefore covers three quarters.
Table 9.4 Insider sales, Nov 2025 to Oct 2026
| Insider | Role | Sales ($m) | Detail |
|---|---|---|---|
| Art Levinson | Lead Independent Director | 86.7 | 300,000 shares in May 2026; sales not flagged as plan trades |
| Tim Cook | Executive Chair (CEO until Aug 2026) | 80.4 | 64,949 shares on 1 Apr 2026 and 191,753 shares on 1 Oct 2026 after RSU vesting |
| Deirdre O'Brien | SVP Retail and People | 23.1 | Apr and Oct 2026 |
| John Ternus | CEO | 8.5 | 25,412 shares on 1 Oct 2026 after 99,878 RSUs vested |
| Jennifer Newstead | General Counsel | 7.6 | weekly plan sales Aug to Oct 2026 |
| Kevan Parekh | CFO | 0.9 | |
| Ben Borders | Principal Accounting Officer | 0.85 |
Amounts as reported in Forms 4, rounded. Total open market sales about $209.1m in 47 transactions by eight insiders; the remainder came from Chris Kondo (Nov 2025). No open market purchases.
10 Risk Factors
- Scope: Item 1A of the FY2026 Form 10-K against the FY2025 Form 10-K: 28 risk factors against 27, one added, none removed, 11 materially reworded and 16 unchanged; the section grew from 9,610 to 12,152 words.
Table 10.1 Risk factors with filed figures
| Risk | Disclosure and change |
|---|---|
| AI (new standalone factor) | Reputational, competitive and financial harm, regulatory action and legal liability from AI, incl. agentic systems that act without authorisation; first set out in the Q2 FY2026 10-Q. R&D rose 32.5% to $45.8bn in FY2026. |
| Components, compute and storage | Supply constraints and rising costs for advanced semiconductors, memory and storage expected to intensify; price increases may not offset them; manufacturing purchase obligations $89.7bn. |
| Search licensing | Revenue from Google and others for search on Apple platforms; the D.C. District Court remedies of 2 Sep 2025 are under appeal by DOJ and Google; a reversal could bar Google from offering Apple commercial terms for search distribution. |
| App Store commissions | Supreme Court review of the Ninth Circuit decision on commissions for external link purchases; developers using alternative distribution may cut or remove Apple's commission. |
| EU Digital Markets Act | EUR 500m fine in Apr 2025 (appealed) and fines of up to 10% of annual worldwide net sales possible if the Article 6(4) investigation finds a violation (Item 3); interoperability rules may stop features such as Siri AI launching in some jurisdictions (Item 1A). |
| Greater China and trade | Greater China $82.4bn, 17.2% of FY2026 net sales; China data localisation rules; government restrictions could force an exit from a country at short notice; tariff refunds may not be collected. |
| Gross margin volatility | Factor now covers net sales and results of operations; drivers named are memory, storage and semiconductor costs, Apple's own pricing, AI investment and licensing arrangements, which the filing names as a large contributor to results of operations. |
| Cybersecurity | Heading now states that Apple experiences cybersecurity incidents; adds AI driven attacks and AI systems as targets. |
How risk factors changed
- Comparison: 10-K FY2026 (year to 26 Sep 2026) filed 3 Nov 2026 acc 0000320193-26-000026 against 10-K FY2025 (year to 27 Sep 2025) filed 31 Oct 2025 acc 0000320193-25-000079.
- AI is named in 14 risk factors against 5 a year earlier (43 mentions of the spelled out term against 6)
- Memory is named in 3 risk factors against none in the FY2025 10-K, tied to supply constraints, rising costs and price increases
- Total risk factor text grew 26%, from 9,610 to 12,152 words, with one factor added and none removed
- Compute capacity and data centers are now part of the supply risk factor, including reliance on third party cloud providers
- App Store commission risk now covers the Supreme Court review of the Ninth Circuit decision and alternative developer distribution models
Table 10.2 Size of the risk factor section
| Measure | 10-K FY2025 | 10-K FY2026 |
|---|---|---|
| Risk factors (count) | 27 | 28 |
| Words in Item 1A | 9,610 | 12,152 |
Table 10.3 Risk factors added, removed and materially reworded
| Change | Risk factor | What changed |
|---|---|---|
| Added | Issues related to AI may cause reputational, competitive, financial harm | New factor (first set out in the Q2 FY2026 10-Q) listing AI risks from returns on investment, IP and export controls to autonomous or agentic systems that act without authorisation, conceal actions or resist instructions, plus diverging AI and super intelligence regulation. |
| Reworded | Ability to obtain components, compute capacity and storage | Grew from 281 to 652 words: states Apple is experiencing supply constraints and rising costs for advanced semiconductors, memory and storage, expects this to intensify for memory and storage, notes price increases may not offset it, and adds reliance on own and third party data centers, with power, water, land and financing limits. |
| Reworded | Products, services and AI technologies may have defects | Heading now names AI technologies; adds that AI is nondeterministic and can give inaccurate outputs, that AI used in software development can add bugs, and that AI driven phishing and deepfakes raise device security risk. |
| Reworded | Access to third party intellectual property | Now states that Apple products have been alleged to infringe the IP rights of others; otherwise rephrased. |
| Reworded | Support from third party software developers | Grew from 313 to 548 words: adds that developers using alternative distribution and payment, including direct to consumer models, may cut or remove Apple's commission, and adds developer fraud risks heightened by AI. |
| Reworded | Cybersecurity incidents and unauthorized access to data | Heading now states Apple experiences cybersecurity incidents; adds AI driven attacks, systemic cascading failure risk, AI systems as attack targets and limits of vulnerability scanning and patching. |
| Reworded | New business strategies, commercial relationships and acquisitions | Adds investments in AI technology, infrastructure and staff, including commitments for data center capacity, components, equipment and energy, and states AI may not prove beneficial or profitable. |
| Reworded | Legal proceedings and government investigations | Grew from 550 to 907 words: adds class actions claiming statutory damages, AI training data licensing and infringement claims, novel product liability and online safety claims, and child safety litigation across the industry. |
| Reworded | Complex and changing laws and regulations worldwide | Adds data centers and super intelligence to regulated areas, conflicting rules across jurisdictions, and sudden government restrictions for national security or trade reasons that could force Apple to exit a country with little notice. |
| Reworded | Media, political and regulatory scrutiny of tech industry | Adds that the US Supreme Court is reviewing the Ninth Circuit decision on the injunction barring any commission on external link purchases, that DMA interoperability rules have caused Apple not to launch features such as Siri AI in some jurisdictions, and that licensing deals may not be renewed. |
| Reworded | Laws on personal data collection, use and transfer | Adds China data localisation rules limiting data transfers out of China, possible suspension or revocation of business licenses, and online safety and age verification duties for minors. |
| Reworded | Net sales, gross margins and results subject to volatility | Heading adds results of operations; new drivers listed are memory, storage and advanced semiconductor costs, Apple's own pricing actions, AI investment and changes to licensing arrangements, and it names third party licensing arrangements as a large contributor to results of operations. |
Table 10.4 Risk factor updates in quarterly reports since the annual filing
| Filing | Change disclosed |
|---|---|
| 10-Q Q1 FY2026 (Dec 2025 quarter) filed 30 Jan 2026 | No material changes since the FY2025 10-K. |
| 10-Q Q2 FY2026 (Mar 2026 quarter) filed 1 May 2026 | Updated five factors: AI safety risks in product defects, AI driven cyberattacks, the Ninth Circuit instruction to allow a commission and the Google search remedies appeal, online safety and age verification duties, and memory (DRAM) and storage (NAND) costs in gross margin; added the new AI risk factor. |
| 10-Q Q3 FY2026 (Jun 2026 quarter) filed 31 Jul 2026 | Updated the components factor to cover computing resources and expected intensifying memory and storage cost pressure, added commission loss from alternative developer distribution, and stated DMA interoperability rules may stop features such as Siri AI launching in some jurisdictions. |
| No 10-Q filed since the FY2026 10-K (as of 4 Nov 2026) | Not applicable. |
11 Stock Price, Scenarios & Sensitivity
- AAPL traded at $331.13 in pre market trade on 4 Nov 2026, after a close of $331.90 on 3 Nov and $338.32 on 2 Nov before the results release after the close; 5.9% below the 52 week high of $351.73 (23 Oct 2026) and 36.3% above the 52 week low of $242.96.
- Price path in 2026: month end close $253.79 in March, $312.06 in May, $333.02 in September and $344.63 in October; +23.8% over twelve months.
- Valuation: 36.9x FY2026 EPS of $8.98; market value $4.81tn on 14.53bn shares; dividend yield 0.33% on the $0.27 quarterly dividend.
- Scenario model: net sales grow from FY2026 $478.8bn for three years to FY2029; operating margin as stated; other income $1.17bn a year as in FY2026; 17% tax rate; price equals FY2029 EPS times exit P/E.
Critical factors and core assumptions
Table 11.1 Critical factors behind the best case
| Factor | Current value | Best case requires | Evidence in filings and calls |
|---|---|---|---|
| Memory and storage costs | Q4 FY2026 products gross margin 37.2% incl. about 1 point of tariff refunds | products gross margin holds near FY2026's 39.3% as costs stabilise | 10-K FY2026 Items 1, 1A and 7 |
| iPhone demand and supply | FY2026 $254.1bn, +21.2%; purchase obligations $89.7bn | iPhone growth above 8% a year to FY2029 | 10-K FY2026; 8-K Ex 99.1, 2 Nov 2026 |
| Services growth | $123.3bn, +13.0%; Q4 +9.8%; 76.2% gross margin | Services growth back above 12% a year | 10-K FY2026 Item 7 |
| Google search licensing | amount not disclosed; remedies under appeal | appeal leaves commercial terms for search distribution in place | 10-K FY2026 Item 1A |
| Greater China | FY2026 $82.4bn, +28.0%; Q4 +21.0% | Greater China holds above $80bn a year | 10-K FY2026 segment note |
| AI cost base | R&D $45.8bn (9.6% of net sales); licensed intangibles $29.6bn gross | R&D grows slower than net sales after FY2027 | 10-K FY2026 Item 7 and intangible assets note |
- Base year FY2026 net sales $478.8bn; operating income $158.1bn (33.0% margin); diluted EPS $8.98.
- Best case: 9% net sales CAGR, 34% operating margin, 34x P/E, share count (6%).
- Base case: 6% net sales CAGR, 31.5% margin, 28x P/E, share count (6%) from buybacks.
- Worst case: 1% net sales CAGR, 28% margin, 20x P/E, share count (4%).
- Tax rate 17% (FY2026: 17.0%); share count base 14.53bn (10-K cover, 23 Oct 2026); net cash $56.8bn not added to the price.
Scenarios, three years forward
Table 11.2 Scenario analysis, FY2026 to FY2029
| Measure | Worst case | Base case | Best case |
|---|---|---|---|
| Revenue CAGR, 3 years (%) | 1.0 | 6.0 | 9.0 |
| Revenue, FY2029 ($bn) | 493.3 | 570.3 | 620.1 |
| Operating margin, FY2029 (%) | 28.0 | 31.5 | 34.0 |
| Net income, FY2029 ($bn) | 115.6 | 150.1 | 176.0 |
| EPS, FY2029 ($) | 8.29 | 10.99 | 12.88 |
| Exit P/E (x) | 20.0 | 28.0 | 34.0 |
| Implied price ($) | 166 | 308 | 438 |
| Change against $331.13 (%) | (50) | (7) | 32 |
| Implied annual return (%) | (20.6) | (2.4) | 9.8 |
Implied annual return excludes dividends ($0.27 per share quarterly). Change and return are measured against the pre market price of $331.13 on 4 Nov 2026.
Sensitivity analysis
Table 11.3 Sensitivity of implied price to revenue CAGR and operating margin at 28x P/E
| Revenue CAGR \ Operating margin | 28% | 30% | 32% | 33% | 34% |
|---|---|---|---|---|---|
| 1% | $237 | $254 | $266 | $279 | $287 |
| 3% | $251 | $269 | $282 | $296 | $305 |
| 6% | $274 | $293 | $308 | $322 | $332 |
| 8% | $289 | $310 | $325 | $341 | $351 |
| 9% | $297 | $318 | $334 | $350 | $361 |
Cells show implied share price in year 3. Pre market price of 4 Nov 2026 $331.13. Blue cells sit above it, red cells below.
Table 11.4 Sensitivity of implied price to exit P/E and operating margin at 6% revenue CAGR
| Exit P/E \ Operating margin | 28% | 30% | 32% | 33% | 34% |
|---|---|---|---|---|---|
| 20x | $195 | $209 | $220 | $230 | $237 |
| 24x | $235 | $251 | $264 | $276 | $284 |
| 28x | $274 | $293 | $308 | $322 | $332 |
| 31x | $303 | $324 | $341 | $357 | $367 |
| 34x | $332 | $356 | $374 | $391 | $403 |
Cells show implied share price in year 3. Pre market price of 4 Nov 2026 $331.13. Blue cells sit above it, red cells below.
Disclaimer
This analysis is for information only and is not financial advice. It is derived from public SEC filings retrieved via sec-api.io and is not a publication of the U.S. Securities and Exchange Commission. Scenario values are model outputs under stated assumptions and are not forecasts. Data as of 4 November 2026.
Sources
All company figures are read from SEC filings retrieved through the sec-api.io MCP server. Management statements come from the earnings releases and other exhibits to the Forms 8-K. The Q1 FY2027 outlook was stated by management on the Q4 FY2026 earnings call held by the company on 2 Nov 2026, is labelled as such and is not in a filing; other earnings call statements are used only where a Form 8-K exhibit or the Form 10-K repeats them. Competitor figures come only from the SEC filings of those companies.
Table A.1 Filings used, with accession numbers
| Form | Period | Filed | Accession number |
|---|---|---|---|
| 10-K | FY2026 | 3 Nov 2026 | 0000320193-26-000026 |
| 8-K (2.02) Ex 99.1 | Q4 FY2026 | 2 Nov 2026 | 0000320193-26-000024 |
| 10-Q | Q3 FY2026 | 31 Jul 2026 | 0000320193-26-000020 |
| 8-K (2.02) Ex 99.1 | Q3 FY2026 | 30 Jul 2026 | 0000320193-26-000018 |
| 10-Q | Q2 FY2026 | 1 May 2026 | 0000320193-26-000013 |
| 8-K (2.02) Ex 99.1 | Q2 FY2026 | 30 Apr 2026 | 0000320193-26-000011 |
| 10-Q | Q1 FY2026 | 30 Jan 2026 | 0000320193-26-000006 |
| 8-K (2.02) Ex 99.1 | Q1 FY2026 | 29 Jan 2026 | 0000320193-26-000005 |
| 10-K | FY2025 | 31 Oct 2025 | 0000320193-25-000079 |
| 8-K (2.02) Ex 99.1 | Q4 FY2025 | 30 Oct 2025 | 0000320193-25-000077 |
| 10-K | FY2024 | 1 Nov 2024 | 0000320193-24-000123 |
| 10-K | FY2023 | 2 Nov 2023 | 0000320193-23-000106 |
| DEF 14A | 2026 annual meeting | 8 Jan 2026 | 0001308179-26-000008 |
| 8-K (5.07) | 24 Feb 2026 | 24 Feb 2026 | 0001140361-26-006577 |
| 8-K (5.02) | 17 Apr 2026 | 20 Apr 2026 | 0001140361-26-015711 |
| 8-K/A (5.02) | 17 Apr 2026 | 1 Sep 2026 | 0001140361-26-035325 |
| 8-K (5.02) | 4 Dec 2025 | 5 Dec 2025 | 0001140361-25-044561 |
| 8-K (5.02) | 30 Dec 2025 | 2 Jan 2026 | 0001140361-26-000199 |
| Schedule 13G | 31 Mar 2026 | 29 Apr 2026 | 0002100119-26-000139 |
| Schedule 13G/A | 13 Mar 2026 | 26 Mar 2026 | 0000102909-26-000630 |
Table A.2 Peer filings used
| Company | Form | Filed | Accession number |
|---|---|---|---|
| Alphabet | 10-Q | 28 Oct 2026 | 0001652044-26-000084 |
| Amazon | 8-K | 29 Oct 2026 | 0001018724-26-000038 |
| Microsoft | 10-Q | 28 Oct 2026 | 0001193125-26-436133 |
| Netflix | 10-Q | 21 Oct 2026 | 0001065280-26-000291 |
| Spotify | 6-K | 22 Oct 2026 | 0001140361-26-040435 |
| Qualcomm | 8-K | 29 Jul 2026 | 0000804328-26-000085 |
| Micron | 8-K | 30 Sep 2026 | 0000723125-26-000018 |
| Arm | 6-K | 29 Jul 2026 | 0001973239-26-000113 |
| HP Inc. | 8-K | 26 Aug 2026 | 0000047217-26-000048 |
| Dell | 8-K | 1 Sep 2026 | 0001571996-26-000039 |
| Intel | 10-Q | 29 Oct 2026 | 0000050863-26-000191 |
| AMD | 8-K | 3 Nov 2026 | 0000002488-26-000188 |
Table B.1 Exhibits to Forms 8-K filed in the last twelve months
| Filed | Exhibit | Document | Content |
|---|---|---|---|
| 5 Dec 2025 | 8-K body (no exhibits; Item 5.02) | General counsel succession: Jennifer Newstead to replace Kate Adams | Announced 4 Dec 2025: Jennifer Newstead becomes general counsel on 1 Mar 2026, joining as senior vice president in Jan 2026 and reporting to CEO Tim Cook; Kate Adams, general counsel since 2017, stays to oversee government affairs until retirement in late 2026, after which Newstead leads that group |
| 2 Jan 2026 | 8-K body (no exhibits; Item 5.02) | Principal accounting officer change | Ben Borders, 45, appointed principal accounting officer from 1 Jan 2026, succeeding Chris Kondo; Borders joined Apple in Nov 2010; prior role Director of Technical Accounting |
| 29 Jan 2026 | EX-99.1 | Q1 FY2026 (Dec 2025 quarter) results | Revenue $143.8bn, up 16%; diluted EPS $2.84, up 19%; net income $42.1bn; iPhone $85.3bn (up 23%); Services $30.0bn (up 14%); Mac $8.4bn (down 7%); iPad $8.6bn (up 6%); Wearables, Home and Accessories $11.5bn (down 2%) |
| 24 Feb 2026 | 8-K body (Item 5.07) | 2026 annual meeting vote results | Annual meeting held 24 Feb 2026; all 8 directors elected; support of votes cast ranged from 91.0% (Art Levinson) to 99.6% (Wanda Austin); Tim Cook 98.9%; Say on pay approved with 91.4% of votes cast (8.30bn for, 0.78bn against) |
| 24 Feb 2026 | EX-10.1 | Non Employee Director Stock Plan, amended and restated effective 24 Feb 2026 | Board adopted the restatement on 4 Nov 2025, subject to shareholder approval on 24 Feb 2026; Share limit of 44.8m shares; each RSU share counts as two against the limit |
| 24 Feb 2026 | EX-10.2 | Form of director RSU award agreement under the restated plan | Standard terms: vesting requires continued board service; unvested units forfeit on departure except death, which triggers full vesting; Dividend equivalent rights credited in cash on vesting; governed by California law |
| 20 Apr 2026 | 8-K body (no exhibits; Item 5.02) | CEO succession: John Ternus to succeed Tim Cook on 1 Sep 2026 | Board appointed John Ternus, 50, SVP Hardware Engineering, as CEO and director effective 1 Sep 2026; he joined Apple in 2001; Tim Cook becomes Executive Chair; Art Levinson moves from Chair to Lead Independent Director on the same date |
| 30 Apr 2026 | EX-99.1 | Q2 FY2026 (Mar 2026 quarter) results; $100bn buyback; dividend raised 4% | Revenue $111.2bn, up 17%; diluted EPS $2.01, up 22%; net income $29.6bn; iPhone $57.0bn (up 22%); Services $31.0bn (up 16%); Mac $8.4bn (up 6%); iPad $6.9bn (up 8%) |
| 30 Jul 2026 | EX-99.1 | Q3 FY2026 (Jun 2026 quarter) results | Revenue $109.4bn, up 16%; diluted EPS $2.02, up 29%, including $0.11 from tariff refunds; Gross margin 50.1%, including about 2 points from tariff refunds |
| 1 Sep 2026 | 8-K/A body (no exhibits; Item 5.02) | Pay terms for CEO John Ternus and Executive Chair Tim Cook | Ternus salary raised to $3m on 1 Sep 2026; prorated RSU award of $2.5m for FY2026 service as CEO; Ternus FY2027 equity award target $55m: 75% performance RSUs tied to relative TSR against the S&P 500, 25% time based RSUs over four years |
| 2 Nov 2026 | EX-99.1 | Q4 FY2026 (Sep 2026 quarter) and FY2026 results; first release under CEO Ternus | Q4 revenue $114.5bn, up 12%; diluted EPS $2.10, up 14%, including $0.05 from tariff refunds; gross margin 47.9% including about 1 point from refunds; iPhone $57.6bn (up 17%); Mac $10.8bn (up 24%); Services $31.6bn (up 10%); iPad $6.2bn (down 10%); Wearables $8.3bn (down 8%); Greater China $17.5bn (up 21%) |
