# AAPL Full forecast · Q1 FY27

> The forecast for Apple: the next two quarters line by line, three years of sales and EPS, a low and a high case. Next report: Q1 FY27 in January 2027. Date not yet set.

Canonical: https://pricedin.markets/aapl/fq1-2027/forecast/

cutoff 3 November 2026, 04:12 ET

The forecast for Apple: the next two quarters line by line, three years of sales and EPS, a low and a high case. Next report: Q1 FY27 in January 2027. Date not yet set.

[Quarter forecast →](https://pricedin.markets/aapl/fq1-2027/preview/)

AAPL · as of 2026-11-03 04:12:14 ET · 7 AI analysts · 80% ranges, 1 in 10 to 9 in 10

## Sales and earnings outlook

Next quarter · Q1 FY27

Sales $156.0B +9% on Q1 FY26

Diluted EPS $2.90 +2% on Q1 FY26

Quarter after · Q2 FY27

Sales $120.6B +8% on Q2 FY26

Diluted EPS $1.97 −2% on Q2 FY26

This year · FY2027

Sales $512.0B +7% on FY2026

Diluted EPS $8.75

Next year · FY2028

Sales $544.0B +6% on FY2027

Diluted EPS $9.69 +11% on FY2027

Year +2 · FY2029

Sales $577.0B +6% on FY2028

Diluted EPS $10.68 +10% on FY2028

##### Sales

PricedIn **$156.0B** $152.5B – $160.0B

$152.5B $154.4B $156.0B $157.8B $160.0B

##### diluted EPS

PricedIn **$2.90** $2.70 – $3.10

$2.70 $2.80 $2.90 $3.00 $3.10

**Middle** the forecast **50% range** 1 in 4 chance the result comes in below this bar, 1 in 4 above it. Half the time it lands inside. **80% range** 1 in 10 chance below this line, 1 in 10 above it. These are the low and high printed by each number.

All seven analysts anchor on the company's outlook and differ by less than its width. Analyst A is the one outlier, lifting sales and margin because the company has beaten its own guide; the rest sit at or near the midpoint. They differ more on cash: Analyst G expects holiday working capital to absorb far more cash than the others.

The analysts expect first-quarter fiscal 2027 sales of about $156.0B, a record holiday quarter held back by memory costs and tight supply.

Sales **$156.0B** +9% on Q1 FY26 ($143.8B)

*50% range* $154.4B – $157.8B *80% range* $152.5B – $160.0B

Diluted EPS **$2.90** +2% on Q1 FY26 ($2.84)

*50% range* $2.80 – $3.00 *80% range* $2.70 – $3.10

#### Investment and cash generation

Base case

Capital spending **$2.70B**

Free cash flow **$51.3B**

Free cash flow: operating cash flow less capital spending.

- **Cash capital spending of about $2.7B pays for tooling for new devices, data-center servers for Siri AI, offices and stores; it supports this quarter's launches rather than adding sales. Free cash flow, defined here as operating cash flow less capital spending, averages $51.3B in the base case, as holiday profits and supplier payables arrive together. Analyst G's free cash flow is lowest at $40.9B, because it assumes inventory, supplier payments and taxes absorb more cash. *3 of 7***
  - **Analyst A** My estimate of first-party data-center and private cloud compute spending for Siri AI; the company relies partly on third-party capacity, so not all AI compute is its own capital spending.
  - **Analyst G** Future inventory investment and normal tax timing keep conversion restrained; none of the working-capital lines is a residual plug.
  - **Analyst C** Forecast assumption: the December quarter usually collects strongly after the September launches; modest net inflow.

Apple says the holiday quarter should be its best ever for revenue, which it expects to grow between 7% and 10% year-over-year, a view that already allows for constrained supply. The analysts' average sales forecast is $156.0B, putting sales growth on a year earlier at +8.5%, close to the middle of that outlook.

Earnings grow much less than sales. The average forecast for earnings per share is $2.90, with growth in earnings per share of just +2.1%. The reason is memory: the company guided gross margin lower and called memory pricing unprecedented, and the analysts put gross margin near +46%.

Supply is the other limit. The company expects Mac and iPad to be short of memory because demand ran above its plans, and the new foldable iPhone Duo is constrained. Analyst D read that as support for the low end: falling well short of the outlook would take demand breaking, not just supply.

The analysts barely differ. Middle sales forecasts run from $156.0B for the lowest analyst to sales of $157.5B for the highest, and middle earnings per share from $2.89 to earnings per share of $2.96. Analyst A sits highest, betting the company again beats the top of its own outlook.

The low case puts sales at $152.5B and earnings per share at $2.70; the high case puts sales at $160.0B and earnings per share at $3.10.

Earnings per share of about $2.90 rest on gross margin near +46%, operating margin near +32%, net income of about $42.2B, the guided tax rate and a slightly smaller share count from buybacks.

#### Sales by quarter

Q3 FY25 $94.0B +10%

Q4 FY25 $102.5B +8%

Q1 FY26 $143.8B +16%

Q2 FY26 $111.2B +17%

Q3 FY26 $109.4B +16%

Q4 FY26 $114.5B +12%

Q1 FY27 $156.0B +9%

Each percent is on the same quarter a year earlier. The last row is the PricedIn forecast.

#### The quarter forecast, line by line

| Line | Q4 FY26 reported | Q1 FY26 reported | Q1 FY27 forecast | Q2 FY26 reported | Q2 FY27 forecast |
| --- | --- | --- | --- | --- | --- |
| Net sales | $114.5B | $143.8B | $156.0B | $111.2B | $120.6B |
| Sales growth, year on year | +12% | +16% | +9% | +17% | +8% |
| Products | $82.9B | $113.7B | $123.4B | $80.2B | $86.7B |
| Services | $31.6B | $30.0B | $32.6B | $31.0B | $33.9B |
| Operating segments |  |  |  |  |  |
| Americas | $48.7B | $58.5B | $63.4B | $45.1B | $48.9B |
| Europe | $32.0B | $38.1B | $41.5B | $28.1B | $30.6B |
| Greater China | $17.5B | $25.5B | $27.5B | $20.5B | $22.0B |
| Japan | $6.5B | $9.4B | $10.1B | $8.4B | $9.0B |
| Rest of Asia Pacific | $9.7B | $12.1B | $13.5B | $9.1B | $10.1B |
| Cost of sales |  |  |  |  |  |
| Products | $52.1B | $67.5B | $76.7B | $49.2B | $57.3B |
| Services | $7.59B | $7.05B | $8.15B | $7.22B | $8.40B |
| Cost of sales | $59.7B | $74.5B | $84.9B | $56.4B | $65.7B |
| Gross margin | $54.8B | $69.2B | $71.1B | $54.8B | $54.9B |
| Gross margin | 47.9% | 48.2% | 45.6% | 49.3% | 45.5% |
| Research and development | $11.7B | $10.9B | $12.6B | $11.4B | $12.8B |
| Selling, general and administrative | $7.46B | $7.49B | $7.95B | $7.48B | $7.85B |
| Total operating expenses | $19.2B | $18.4B | $20.6B | $18.9B | $20.7B |
| Operating income | $35.6B | $50.9B | $50.5B | $35.9B | $34.2B |
| Operating margin | 31.1% | 35.4% | 32.4% | 32.3% | 28.3% |
| Other income/(expense), net | $504M | $150M | $300M | −$52M | $300M |
| Income before provision for income taxes | $36.1B | $51.0B | $50.8B | $35.8B | $34.5B |
| Provision for income taxes | $5.42B | $8.90B | $8.64B | $6.25B | $5.86B |
| Tax rate | 15.0% | 17.5% | 17.0% | 17.5% | 17.0% |
| Net income | $30.7B | $42.1B | $42.2B | $29.6B | $28.6B |
| Diluted (in shares) | 14.63B | 14.81B | 14.55B | 14.73B | 14.50B |
| Diluted EPS | $2.10 | $2.84 | $2.90 | $2.01 | $1.97 |

The lines as the company's statement shows them. The forecast columns are the tab's PricedIn forecast, one analyst's whole plan, the analyst nearest the middle of the seven on both sales and earnings per share, so the lines add up to the numbers above. Sales growth is the change on the same quarter a year earlier. Earnings per share is the headline's: the company's own for the reported quarter, and for a forecast quarter that analyst's own, worked from its lines with the company's adjustments.

#### What it rests on

**Revenue outlook**

December-quarter revenue expected to grow between 7% and 10% year-over-year “We expect our December quarter total company revenue to grow between 7% and 10% year-over-year, which reflects our best view of constrained supply.” Fourth-quarter fiscal 2026 earnings call

**Gross margin outlook**

We expect gross margin to be between 45% and 46%, mainly from higher memory costs “We expect gross margin to be between 45% and 46%. This includes primarily the impact of higher memory costs, as well as some costs related to the ramp of Siri AI.” Fourth-quarter fiscal 2026 earnings call

**Services outlook**

Services revenue expected to grow between 8% and 9% year-over-year in the December quarter “We expect services revenue to grow between 8% and 9% year-over-year in the December quarter.” Fourth-quarter fiscal 2026 earnings call

**Memory prices**

Management called current memory pricing unprecedented “What we're seeing with memory pricing right now is unprecedented.” Fourth-quarter fiscal 2026 earnings call

**Supply limits**

Mac and iPad short of memory as demand beat plans “And for the December quarter, we expect constraints on Mac and iPad, primarily driven by memory, as demand has been higher than what we expected.” Fourth-quarter fiscal 2026 earnings call

**Operating costs**

Operating expenses guided to a narrow band “We expect operating expenses to be between $20.4 billion and $20.8 billion.” Fourth-quarter fiscal 2026 earnings call

#### Scenarios Explained: Base, Low, and High

Base the middle forecast

Q1-FY2027

Sales **$156.0B**

Diluted EPS **$2.90**

Capital spending **$2.70B**

Free cash flow **$51.3B**

**FCF walk and spending detail**

Forecast dollars. Free cash flow is operating cash flow less capital spending.

| Net income | $42.2B |
| --- | --- |
| Depreciation and amortization | $3.50B |
| Share-based compensation expense | $3.80B |
| Changes in operating assets and liabilities | $4.50B |
| Operating cash flow | $54.0B |
| Less capital spending | −$2.70B |
| Free cash flow | $51.3B |

**Net income**

Base case GAAP net income of 42,201 million dollars for the first quarter of fiscal 2027, corresponding to diluted earnings per share of 2.90 dollars across 14,552 million diluted shares.

**Depreciation and amortization**

Forecast non-cash depreciation and amortization expense for the first quarter of fiscal 2027.

**Share-based compensation expense**

Forecast non-cash share-based compensation expense for the first quarter of fiscal 2027.

**Changes in operating assets and liabilities**

Seasonal holiday working capital inflow of 4,499 million dollars driven by higher accounts payable, deferred revenue from Siri artificial intelligence hardware deferrals, and sell-through of fourth-quarter inventory.

##### Capital spending

We forecast 2.7 billion dollars of capital spending in the first quarter of fiscal 2027, up from 2.37 billion dollars a year earlier to support Siri artificial intelligence server infrastructure and iPhone Duo manufacturing tooling, allocated across the three Note 5 property, plant, and equipment categories with zero unallocated capital spending.

| Machinery, equipment and internal-use software | $1.95B |
| --- | --- |
| Land and buildings | $480M |
| Leasehold improvements | $270M |
| Unallocated capital spending | $0 |
| Total capital spending | $2.70B |

**Machinery, equipment and internal-use software** Model forecast assumption allocating approximately 72 percent of first-quarter capital spending to product tooling and private cloud compute servers; Apple discloses this historical asset class in Note 5 of its annual report but does not publish a forward capital spending split.

“Machinery, equipment and internal-use software 83,420 80,205”

**Land and buildings** Model forecast assumption allocating approximately 18 percent of first-quarter capital spending to corporate, data center, and Houston manufacturing buildings; Apple discloses this historical asset class in Note 5 of its annual report.

“Land and buildings $ 27,337 $ 24,690”

**Leasehold improvements** Model forecast assumption allocating 10 percent of first-quarter capital spending to retail store and facility leasehold improvements; Apple discloses this historical asset class in Note 5 of its annual report.

“Leasehold improvements 15,091 14,233” “Cash generated by operating activities 145,097 111,482” “Payments for acquisition of property, plant and equipment (9,041) (12,715)” “And as you know, our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.”

#### Three ways the base case happens

These levers explain the outcome together.

1. **Sales land mid-outlook, capped by supply rather than demand** The outlook reflects the company's best view of constrained supply, with Mac and iPad demand above plan. Keeps sales near the middle of the outlook: stronger demand cannot ship, so upside is limited this quarter, while the gap between demand and supply props up the low end. Holiday sales also build supplier payables, which lifts operating cash flow in the quarter.
  Watch Comments on delivery times for iPhone Duo, Mac and iPad during the holiday season.
  **Analyst reasoning**
  - **Analyst D** Holiday revenue at the middle of the guided 7 to 10 percent range, held there by constrained supply despite stronger-than-expected demand
  - **Analyst C** December-quarter guidance: revenue up 7-10% year over year, gross margin 45-46%, operating expenses $20.4-20.8 billion, tax rate about 17%
  - **Analyst F** The December-quarter outlook sets the next quarter
2. **Gross margin in the guided band despite rising memory costs** Management guided margin lower mainly on memory, plus Siri AI cloud costs; carry-in inventory and price increases offset part. Gross margin near +46% turns sales growth into much slower earnings growth, which is why earnings per share rise far less than sales. Cheaper carry-in memory still cushions this quarter, so most of the squeeze lands later in the year.
  Watch Industry reports on memory contract prices during the holiday quarter.
  **Analyst reasoning**
  - **Analyst E** Product mix and pricing partly offset memory inflation
  - **Analyst G** Memory and artificial intelligence costs prevent an immediate margin rebound
  - **Analyst B** Near-term gross margin compression in fiscal 2027 from unprecedented memory price inflation, the roll-off of fiscal 2026 tariff refunds, and Siri artificial intelligence revenue deferrals and cloud inference costs
3. **Services grow at the guided pace and costs stay on plan** Services are guided below recent growth on licensing and currency; operating costs and tax are guided narrowly. Services add steady, high-margin sales that soften the product margin squeeze; operating costs near the guide and a smaller share count from buybacks carry the rest of the earnings bridge.
  Watch Paid subscription growth and App Store trends the company reports at its next quarterly report.
  **Analyst reasoning**
  - **Analyst F** services growth of 8% to 9%
  - **Analyst E** December-quarter revenue growth near 8.5% and services growth near 8.5%
  - **Analyst G** Moderate continuing share repurchases

Sales near $156.0B and earnings per share near $2.90 need revenue to land in the middle of the company's outlook, gross margin near +46% despite memory costs, operating margin near +32%, and supply that limits Mac, iPad and iPhone Duo shipments no more than management already assumes. Services must grow in line with the guide and buybacks must keep trimming the share count.

High about 1 chance in 10 of better

Q1-FY2027

Sales **$160.0B** +3% vs base

Diluted EPS **$3.10** +7% vs base

Capital spending **$2.70B**

Free cash flow **$52.7B**

**FCF walk and spending detail**

Forecast dollars. Free cash flow is operating cash flow less capital spending.

| Net income | $44.5B |
| --- | --- |
| Depreciation and amortization | $3.60B |
| Share-based compensation expense | $3.90B |
| Other | $400M |
| Changes in operating assets and liabilities | $3.00B |
| Operating cash flow | $55.4B |
| Less capital spending | −$2.70B |
| Free cash flow | $52.7B |

**Net income**

High-case earnings per share of about $3.06.

**Depreciation and amortization**

As in the base.

**Share-based compensation expense**

As in the base.

**Other**

Small.

**Changes in operating assets and liabilities**

Stronger holiday sales build payables more.

##### Capital spending

No company split by line; slightly more server capacity if Siri AI use runs high.

| Unallocated capital spending | $2.70B |
| --- | --- |
| Total capital spending | $2.70B |

“our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.”

#### Three ways the high case happens

These levers explain the outcome together; each is not a separate one-in-ten event.

1. **Supply eases faster, letting pent-up demand ship** Advanced-node constraints are easing and the iPhone Duo ramp is going well, per management. Shipping more of the demand that exceeds supply lifts sales toward the top of the outlook or beyond; extra volume on fixed costs lifts earnings per share faster. Stronger holiday sales build supplier payables, raising high-case free cash flow to an average of $52.7B.
  Watch Shorter iPhone Duo delivery times before the holidays.
  **Analyst reasoning**
  - **Analyst A** iPhone Duo and Mac supply normalize, letting constrained demand convert to sales
  - **Analyst E** Advanced-node and memory supply constraints ease
  - **Analyst F** iPhone Duo supply catching up with demand
2. **Higher prices stick and cheaper inventory cushions memory** Carry-in memory inventory and lower non-memory component costs still help this quarter, per management. Gross margin at the top of the guide adds directly to operating profit, so earnings per share rise more than sales.
  Watch Little holiday discounting on iPhone 18 Pro and iPhone Duo.
  **Analyst reasoning**
  - **Analyst F** price increases holding without unit loss
  - **Analyst G** Better component economics while higher selling prices hold
  - **Analyst D** Holiday sales grow about 11 percent as constraints ease a bit and higher prices hold
3. **Services and subscriptions grow faster than guided** Paid subscriptions reached a new high and grew double digits last quarter. Services carry far higher margins than devices, so a faster services quarter lifts both sales and gross margin.
  Watch Services growth above the guided range at the next quarterly report.
  **Analyst reasoning**
  - **Analyst G** Growing cloud, advertising and subscription revenue
  - **Analyst E** Services and AI-related monetization accelerate
  - **Analyst D** Services growth returns toward 11 percent as currency headwinds fade

Sales of $160.0B and earnings per share of $3.10 would need supply to ease faster than management expects so pent-up demand for iPhone Duo, Mac and iPad ships, price increases to hold without losing buyers, and gross margin at the top of its guide as carry-in inventory and cheaper non-memory parts cushion costs. Services would also need to beat the guided pace. Analysts A and G go furthest, with high-case sales of $162.0B and high-case earnings per share of $3.15: Analyst A because the company has beaten the top of its outlook in three of the last four quarters, Analyst G because it keeps room for supply surprises.

Management says advanced-node chip constraints are easing as more products move to the newest process, and it expects record holiday revenue.

The seven highs run from $159.5B (Analyst B) to $162.0B (Analyst G).

First sign The first-quarter report, date not given: sales growth above the outlook's top with gross margin at the top of its guide.

Low about 1 chance in 10 of worse

Q1-FY2027

Sales **$152.5B** −2% vs base

Diluted EPS **$2.70** −7% vs base

Capital spending **$2.80B**

Free cash flow **$43.2B**

**FCF walk and spending detail**

Forecast dollars. Free cash flow is operating cash flow less capital spending.

| Net income (low case) | $39.7B |
| --- | --- |
| Depreciation and amortization | $3.40B |
| Share-based compensation expense | $3.70B |
| Trade working capital | −$1.20B |
| Other operating items, net | $400M |
| Operating cash flow | $46.0B |
| Less capital spending | −$2.80B |
| Free cash flow | $43.2B |

**Net income (low case)**

Low-case December net income: revenue about $152.5 billion with gross margin near 44.8%.

**Depreciation and amortization**

Forecast assumption, same as base.

**Share-based compensation expense**

Forecast assumption, same as base.

**Trade working capital**

Forecast assumption: channel fill and inventory build against softer demand.

**Other operating items, net**

Forecast assumption.

##### Capital spending

Same four named categories as the base case; the split is my estimate, not a company-disclosed allocation. Low-case capex is slightly higher than base because supply-security spending is less discretionary.

| data centers | $1.20B |
| --- | --- |
| tooling | $950M |
| retail investments -- investments in our retail store | $250M |
| our facilities | $400M |
| Unallocated capital spending | $0 |
| Total capital spending | $2.80B |

**data centers** My estimate, not a company plan: capacity security spending continues even in the weak case.

“as you know, our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.”

**tooling** My estimate, not a company plan.

“as you know, our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.”

**retail investments -- investments in our retail store** My estimate, not a company plan.

“as you know, our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.”

**our facilities** My estimate, not a company plan.

“as you know, our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.” “as you know, our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.”

#### Three ways the low case happens

These levers explain the outcome together; each is not a separate one-in-ten event.

1. **Supply limits bite harder than the outlook assumes** Mac, iPad and iPhone Duo are already constrained; the outlook is management's best view of that supply. Fewer devices ship, pushing sales below the outlook's bottom; with operating costs largely fixed, earnings per share fall faster than sales. Weaker holiday sales also build fewer supplier payables, cutting low-case free cash flow to an average of $43.2B.
  Watch Holiday delivery times lengthening for iPhone Duo, Mac or iPad.
  **Analyst reasoning**
  - **Analyst D** Holiday sales grow only about 6 percent, just under the guided 7 to 10 percent, as supply limits bite harder than management's best view
  - **Analyst A** Mac and iPad supply stays constrained and the foldable iPhone ramp stays slow
  - **Analyst F** supply limits on Mac, iPad and the foldable iPhone
2. **Memory costs push gross margin to the guide's floor** Management says memory pricing is unprecedented and still rising beyond December. Lost gross margin comes straight off operating profit, so earnings per share fall even if sales hold; this lever explains more of the earnings gap than the sales gap.
  Watch Industry reports of further memory contract price increases during the quarter.
  **Analyst reasoning**
  - **Analyst C** Memory prices keep rising through fiscal 2027 and the carry-in inventory benefit fades, pushing product gross margin below the December guide
  - **Analyst D** Gross margin near 44.6 percent in the holiday quarter and about 43.8 percent for the year as memory prices keep rising and older cheap inventory runs off
  - **Analyst E** Persistent memory and component-cost inflation
3. **Higher prices cost some holiday buyers** Apple raised Mac and iPad prices in June and iPhone prices in September. Fewer upgrades lower unit sales, partly offset by higher prices per device; the shortfall adds to the supply gap and leaves more inventory, absorbing cash.
  Watch Heavier holiday discounting by carriers and retailers, or weak consumer sentiment readings.
  **Analyst reasoning**
  - **Analyst F** price increases cutting unit demand
  - **Analyst A** Price increases on iPhone, Mac and iPad soften unit demand in the U.S. and Europe
  - **Analyst G** Less affordable devices and slower upgrades after a strong prior cycle

Sales of $152.5B and earnings per share of $2.70 would need sales growth at or below the bottom of the outlook as supply limits bite harder than management expects, gross margin at the floor of its guide as memory costs climb, and higher prices costing some holiday buyers. Together these cut both volume and margin. Analyst G goes furthest on sales, with low-case sales of $151.0B, because weak consumer sentiment raises its allowance for buyers balking at higher prices. Analyst E goes furthest on earnings, with low-case earnings per share of $2.65, because it also lets research and cloud costs stay elevated.

The company has landed at or above the top of its revenue outlook in recent quarters, which is why the analysts' low cases sit only slightly below the outlook's bottom.

The seven lows run from $151.0B (Analyst G) to $153.0B (Analyst A).

First sign The first-quarter report, date not given: gross margin below the guided floor and sales growth below the outlook's bottom.

#### Surfaced outlier views

For Q1-FY2027 the seven analysts sit within 1.0% of the PricedIn number on sales and within 2.1% on diluted EPS. The furthest, and why:

- **Analyst A** · Q1-FY2027: sales **$157.5B**, the highest of the seven (PricedIn $156.0B) and diluted EPS **$2.96**, the highest of the seven (PricedIn $2.90)
  Why Analyst A moves its middle above the outlook's midpoint because the company beat the top of its revenue and margin guides in three of the last four quarters. It carries operating margin of +33% against an average operating margin of +32%, giving net income of $43.1B. Even its low case is the highest of the seven, with low-case sales of $153.0B.
  “The guide midpoint is therefore not the central outcome, so for the December quarter I moved my revenue middle from $156.0 billion to $157.5 billion and my gross margin from 45.5% to 45.9%, and carried part of that into fiscal 2027.”

#### Watch

The first-quarter report, whose date the company has not given: sales growth above the outlook's top or gross margin at the top of its guide points higher; growth near the bottom, margin at the floor, or a weak March outlook points lower.

##### Sales

PricedIn **$120.6B** $114.5B – $126.0B

$114.5B $118.0B $120.6B $122.8B $126.0B

##### diluted EPS

PricedIn **$1.97** $1.70 – $2.20

$1.70 $1.85 $1.97 $2.07 $2.20

**Middle** the forecast **50% range** 1 in 4 chance the result comes in below this bar, 1 in 4 above it. Half the time it lands inside. **80% range** 1 in 10 chance below this line, 1 in 10 above it. These are the low and high printed by each number.

The analysts agree the March quarter falls steeply from the holidays and that earnings drop below last year's March quarter despite higher sales. They differ on how much holiday demand slips into March and how far gross margin falls: Analyst D adds iPhone Duo spillover, Analyst G trimmed margin after reading the others, and Analyst E pairs the lowest sales with the deepest margin reset.

The analysts expect second-quarter fiscal 2027 sales of about $120.6B, a seasonal drop from the holidays, with memory costs squeezing margins harder.

Sales **$120.6B** +8% on Q2 FY26 ($111.2B)

*50% range* $118.0B – $122.8B *80% range* $114.5B – $126.0B

Diluted EPS **$1.97** −2% on Q2 FY26 ($2.01)

*50% range* $1.85 – $2.07 *80% range* $1.70 – $2.20

#### Investment and cash generation

Base case

Capital spending **$2.50B**

Free cash flow **$28.5B**

Free cash flow: operating cash flow less capital spending.

- **Cash capital spending of about $2.5B continues tooling and Siri AI data-center work at a steady pace. Free cash flow, defined here as operating cash flow less capital spending, falls to an average of $28.5B because the company pays suppliers for holiday production in this quarter, only partly offset by collecting holiday receivables. Low-case free cash flow averages $23.5B and high-case free cash flow averages $33.5B, moving with the earnings cases. *3 of 7***
  - **Analyst C** My -$7.5 billion is that net seasonal use of cash, consistent with March-quarter operating cash flow of $28.7 billion in March 2026 and $24.0 billion in March 2025 against $53.9 billion and $29.9 billion in the preceding December quarters.
  - **Analyst G** Seasonal settlement of supplier balances as production falls from holiday levels.
  - **Analyst F** March-quarter payables unwind as in prior years (operating cash flow ran about $1 billion below net income last March).

The March quarter is always smaller than the holiday quarter, and the company will give its outlook for it only at its next report. The analysts' average sales forecast is $120.6B, putting sales growth on a year earlier at +8.5%, helped by iPhone Duo demand that could not ship during the holidays.

Earnings tell a different story. The average forecast for earnings per share is $1.97, a change in earnings per share on a year earlier of −2.0%. Management says memory purchase prices keep rising beyond December while the benefit of cheaper carry-in memory fades, so margins fall even as sales grow.

The analysts put operating margin near +28% and net income near $28.6B. Analyst G cut its March gross margin after reading the others, and Analysts A and C also assume margin slips below the holiday level as costlier memory reaches the products sold.

Middle sales forecasts run from $117.9B for the lowest analysts to sales of $122.0B for the highest, and middle earnings per share from $1.85 to earnings per share of $2.00. Analyst E is lowest on both, with a deeper margin reset and rising research spending.

The low case puts sales at $114.5B and earnings per share at $1.70; the high case puts sales at $126.0B and earnings per share at $2.20. The range is wider than for the holiday quarter because no company outlook anchors it yet.

Earnings per share of about $1.97 rest on operating margin near +28%, net income near $28.6B, gross margin a little below the holiday quarter's, rising research spending and a share count still shrinking from buybacks.

#### The quarter forecast, line by line

| Line | Q4 FY26 reported | Q1 FY26 reported | Q1 FY27 forecast | Q2 FY26 reported | Q2 FY27 forecast |
| --- | --- | --- | --- | --- | --- |
| Net sales | $114.5B | $143.8B | $156.0B | $111.2B | $120.6B |
| Sales growth, year on year | +12% | +16% | +9% | +17% | +8% |
| Products | $82.9B | $113.7B | $123.4B | $80.2B | $86.7B |
| Services | $31.6B | $30.0B | $32.6B | $31.0B | $33.9B |
| Operating segments |  |  |  |  |  |
| Americas | $48.7B | $58.5B | $63.4B | $45.1B | $48.9B |
| Europe | $32.0B | $38.1B | $41.5B | $28.1B | $30.6B |
| Greater China | $17.5B | $25.5B | $27.5B | $20.5B | $22.0B |
| Japan | $6.5B | $9.4B | $10.1B | $8.4B | $9.0B |
| Rest of Asia Pacific | $9.7B | $12.1B | $13.5B | $9.1B | $10.1B |
| Cost of sales |  |  |  |  |  |
| Products | $52.1B | $67.5B | $76.7B | $49.2B | $57.3B |
| Services | $7.59B | $7.05B | $8.15B | $7.22B | $8.40B |
| Cost of sales | $59.7B | $74.5B | $84.9B | $56.4B | $65.7B |
| Gross margin | $54.8B | $69.2B | $71.1B | $54.8B | $54.9B |
| Gross margin | 47.9% | 48.2% | 45.6% | 49.3% | 45.5% |
| Research and development | $11.7B | $10.9B | $12.6B | $11.4B | $12.8B |
| Selling, general and administrative | $7.46B | $7.49B | $7.95B | $7.48B | $7.85B |
| Total operating expenses | $19.2B | $18.4B | $20.6B | $18.9B | $20.7B |
| Operating income | $35.6B | $50.9B | $50.5B | $35.9B | $34.2B |
| Operating margin | 31.1% | 35.4% | 32.4% | 32.3% | 28.3% |
| Other income/(expense), net | $504M | $150M | $300M | −$52M | $300M |
| Income before provision for income taxes | $36.1B | $51.0B | $50.8B | $35.8B | $34.5B |
| Provision for income taxes | $5.42B | $8.90B | $8.64B | $6.25B | $5.86B |
| Tax rate | 15.0% | 17.5% | 17.0% | 17.5% | 17.0% |
| Net income | $30.7B | $42.1B | $42.2B | $29.6B | $28.6B |
| Diluted (in shares) | 14.63B | 14.81B | 14.55B | 14.73B | 14.50B |
| Diluted EPS | $2.10 | $2.84 | $2.90 | $2.01 | $1.97 |

The lines as the company's statement shows them. The forecast columns are the tab's PricedIn forecast, one analyst's whole plan, the analyst nearest the middle of the seven on both sales and earnings per share, so the lines add up to the numbers above. Sales growth is the change on the same quarter a year earlier. Earnings per share is the headline's: the company's own for the reported quarter, and for a forecast quarter that analyst's own, worked from its lines with the company's adjustments.

#### What it rests on

**Holiday seasonality**

First-quarter sales are historically the year's highest “The Company has historically experienced higher net sales in its first quarter compared to other quarters in its fiscal year due in part to seasonal holiday demand.” Apple annual report, fiscal 2024

**Memory beyond December**

Memory purchase prices keep rising after December “And looking beyond the December quarter, we see the pricing for memory purchases continuing to increase. As we said before, we do believe we'll see a decreasing benefit from the carry-in inventory on memory over time.” Fourth-quarter fiscal 2026 earnings call

**iPhone Duo supply**

Foldable iPhone still constrained; ramp going well “iPhone Duo is constrained as of today. The ramp is going well, and we're working hard to get this revolutionary new product into the hands of our customers as quickly as possible.” Fourth-quarter fiscal 2026 earnings call

**AI cloud costs**

Siri AI cloud costs run through services cost of sales “So as we continue to roll out Siri AI to more customers, the associated cloud costs will be recognized through services cost of sales.” Fourth-quarter fiscal 2026 earnings call

**Services headwinds**

Third-party licensing and currency weigh on services “We expect services revenue to grow between 8% and 9% year-over-year in the December quarter. This contemplates sequential headwinds primarily driven by third-party licensing and foreign exchange.” Fourth-quarter fiscal 2026 earnings call

#### Scenarios Explained: Base, Low, and High

Base the middle forecast

Q2-FY2027

Sales **$120.6B**

Diluted EPS **$1.97**

Capital spending **$2.50B**

Free cash flow **$28.5B**

**FCF walk and spending detail**

Forecast dollars. Free cash flow is operating cash flow less capital spending.

| Net income | $28.6B |
| --- | --- |
| Depreciation and amortization | $3.55B |
| Share-based compensation expense | $3.75B |
| Changes in operating assets and liabilities | −$4.91B |
| Operating cash flow | $31.0B |
| Less capital spending | −$2.50B |
| Free cash flow | $28.5B |

**Net income**

Base case GAAP net income of 28,613 million dollars for the second quarter of fiscal 2027, corresponding to diluted earnings per share of 1.97 dollars across 14,500 million diluted shares.

**Depreciation and amortization**

Forecast non-cash depreciation and amortization expense for the second quarter of fiscal 2027.

**Share-based compensation expense**

Forecast non-cash share-based compensation expense for the second quarter of fiscal 2027.

**Changes in operating assets and liabilities**

Seasonal post-holiday working capital outflow of 4,908 million dollars as first-quarter accounts payable and accrued liabilities are settled, partly offset by collection of holiday receivables.

##### Capital spending

We forecast 2.5 billion dollars of capital spending in the second quarter of fiscal 2027 to support ongoing private cloud compute server deployments and product tooling, allocated across the three Note 5 categories with zero unallocated capital spending.

| Machinery, equipment and internal-use software | $1.80B |
| --- | --- |
| Land and buildings | $450M |
| Leasehold improvements | $250M |
| Unallocated capital spending | $0 |
| Total capital spending | $2.50B |

**Machinery, equipment and internal-use software** Model forecast assumption allocating 1.80 billion dollars to manufacturing tooling and data center equipment in the second quarter of fiscal 2027.

“Machinery, equipment and internal-use software 83,420 80,205”

**Land and buildings** Model forecast assumption allocating 450 million dollars to corporate, data center, and manufacturing buildings in the second quarter of fiscal 2027.

“Land and buildings $ 27,337 $ 24,690”

**Leasehold improvements** Model forecast assumption allocating 250 million dollars to retail store and facility leasehold improvements in the second quarter of fiscal 2027.

“Leasehold improvements 15,091 14,233” “Cash generated by operating activities 145,097 111,482” “Payments for acquisition of property, plant and equipment (9,041) (12,715)” “And as you know, our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.”

#### Three ways the base case happens

These levers explain the outcome together.

1. **Usual seasonal drop, softened by late iPhone Duo shipments** First-quarter sales are historically highest; the iPhone Duo was still constrained entering the holidays. Sets March sales well below the holiday quarter but above last year's March quarter; some unmet holiday demand becomes March sales, a shift within the year rather than extra annual sales.
  Watch The March-quarter revenue outlook given at the next quarterly report.
  **Analyst reasoning**
  - **Analyst D** The foldable phone is still constrained and the ramp is going well, so some holiday demand should ship in the March quarter.
  - **Analyst G** The base forecasts sales of about $157 billion then $122 billion; services carry more of the annual growth.
  - **Analyst C** iPhone Duo ramps and Mac/iPad memory-driven supply constraints ease through fiscal 2027, keeping full-year revenue growth near 8%
2. **Gross margin slips as costlier memory reaches products** Management sees memory prices rising beyond December and a fading carry-in inventory benefit. Lower gross margin is the main reason earnings per share fall on a year earlier while sales rise; Analyst G cut its March margin after weighing the other analysts' memory arguments.
  Watch The gross margin range the company guides for March at its next report.
  **Analyst reasoning**
  - **Analyst G** After reading the peers I also reduce March gross margin from 45.8% to 45.0%, net income to about $28.5 billion and diluted earnings to about $1.98
  - **Analyst F** Memory pressure lasts beyond December, so I hold fiscal 2027 gross margin near 45.6% with product margin about 35%
  - **Analyst C** I extend that decline at a moderating pace through fiscal 2027 (45.5%, 45.4%, 45.2%, 45.3% by quarter)
3. **Services keep growing while research spending rises** Siri AI cloud costs sit in services cost of sales, and research spending keeps rising. Services growth adds high-margin sales that cushion the device margin squeeze, but cloud costs trim services margin and rising research spending holds operating margin below last year's March quarter.
  Watch March operating expense guidance above the holiday quarter's level.
  **Analyst reasoning**
  - **Analyst G** I forecast services gross margin of 74% in December, 73.5% in March, 74% in fiscal 2027 and 75% thereafter.
  - **Analyst E** My forecast slows operating-expense growth from fiscal 2026 but keeps absolute research spending rising, while lowering product margins through fiscal 2027.
  - **Analyst F** research spending growth slowing toward 10%

Sales near $120.6B and earnings per share near $1.97 need the usual seasonal drop from the holidays, softened by iPhone Duo orders that ship late, gross margin only slightly below the holiday quarter as costlier memory reaches products, operating margin near +28%, and services still growing despite licensing and currency headwinds.

High about 1 chance in 10 of better

Q2-FY2027

Sales **$126.0B** +4% vs base

Diluted EPS **$2.20** +12% vs base

Capital spending **$3.50B**

Free cash flow **$33.5B**

**FCF walk and spending detail**

Forecast dollars. Free cash flow is operating cash flow less capital spending.

| Net income | $30.5B |
| --- | --- |
| Depreciation and amortization | $3.70B |
| Share-based compensation expense | $3.75B |
| Other non-cash and operating items | $300M |
| Changes in operating assets and liabilities | −$1.20B |
| Operating cash flow | $37.0B |
| Less capital spending | −$3.50B |
| Free cash flow | $33.5B |

**Net income**

High case earnings of about $2.11 per diluted share on 14.45 billion shares.

**Depreciation and amortization**

About 3.0% of sales.

**Share-based compensation expense**

About 3.0% of sales.

**Other non-cash and operating items**

Small net of other operating adjustments.

**Changes in operating assets and liabilities**

Stronger sales convert inventory and receivables faster.

##### Capital spending

Same allocation basis as the other cases; amounts are my estimates.

| tooling | $1.68B |
| --- | --- |
| facilities | $420M |
| data centers | $700M |
| retail investments | $315M |
| Unallocated capital spending | $385M |
| Total capital spending | $3.50B |

**tooling** Higher volumes need more tooling; my estimate.

“our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers”

**facilities** My estimate of facilities spending; not company guidance.

“our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers”

**data centers** My estimate of first-party data-center spending; not company guidance.

“our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers”

**retail investments** My estimate of retail store investment; not company guidance.

“our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers” “we leverage a combination of first and third-party capacity” “our manufacturing purchase obligations have increased by $33 billion from the June to the September quarter”

#### Three ways the high case happens

These levers explain the outcome together; each is not a separate one-in-ten event.

1. **Supply catches up and the iPhone Duo backlog ships** The iPhone Duo was constrained with a ramp going well, per management. Late shipments add March sales on top of normal demand; extra volume over fixed costs lifts earnings per share faster than sales, and stronger sell-through shrinks the seasonal cash drain, lifting high-case free cash flow to an average of $33.5B.
  Watch iPhone Duo available without delays by the end of the holidays.
  **Analyst reasoning**
  - **Analyst F** iPhone Duo supply catching up with demand
  - **Analyst C** iPhone Duo supply recovers faster than management's 'best view of constrained supply' and the foldable proves a runaway hit
  - **Analyst A** iPhone Duo and Mac supply normalize, letting constrained demand convert to sales
2. **Memory prices peak in the spring** Some analysts expect new memory supply and long-term agreements to slow price rises. Gross margin holds near the holiday level instead of slipping, which protects most of the earnings lost in the base case.
  Watch Industry reports of flat memory contract prices for the spring.
  **Analyst reasoning**
  - **Analyst A** Memory prices peak in the spring and the carry-in inventory benefit lasts longer
  - **Analyst F** memory prices peaking
  - **Analyst C** Memory inflation peaks early as long-term agreements and new supply kick in, holding gross margin near 46% through fiscal 2027
3. **Paid AI tiers lift services** Management plans paid expanded access for server-side Siri AI features. New paid tiers add high-margin services sales, lifting both sales and gross margin.
  Watch Launch of paid iCloud tiers for expanded Siri AI use.
  **Analyst reasoning**
  - **Analyst F** services re-accelerating with paid AI tiers
  - **Analyst C** Siri AI monetization begins: paid iCloud+ tiers for server-side features, Maps ads, and record App Store engagement
  - **Analyst B** Accelerated services growth back above 12 percent annually as users upgrade to higher-priced iCloud Plus plans for expanded server-side Siri artificial intelligence capacity

Sales of $126.0B and earnings per share of $2.20 would need supply to catch up so iPhone Duo and Mac demand ships in March, memory prices to peak in the spring, and paid AI tiers and subscriptions to lift services. Analyst G goes furthest, with high-case sales of $132.0B and high-case earnings per share of $2.40, because in its view strong launches with easing supply could make the narrow holiday range too tight and carry momentum into March.

Management says advanced-node chip constraints are easing, and several analysts see the iPhone Duo backlog shipping after the holidays.

The seven highs run from $124.5B (Analyst A) to $132.0B (Analyst G).

First sign The March-quarter outlook at the next report, date not given: strong revenue growth with gross margin held near the holiday range.

Low about 1 chance in 10 of worse

Q2-FY2027

Sales **$114.5B** −5% vs base

Diluted EPS **$1.70** −14% vs base

Capital spending **$2.50B**

Free cash flow **$23.5B**

**FCF walk and spending detail**

Forecast dollars. Free cash flow is operating cash flow less capital spending.

| Net income consistent with the low EPS case | $20.9B |
| --- | --- |
| Depreciation, amortization and share-based compensation | $7.50B |
| Receivables, inventory, payables and other operating assets and liabilities | −$2.40B |
| Operating cash flow | $26.0B |
| Less capital spending | −$2.50B |
| Free cash flow | $23.5B |

**Net income consistent with the low EPS case**

Low-case March-quarter EPS applied to forecast diluted shares, rounded.

**Depreciation, amortization and share-based compensation**

Forecast non-cash add-backs near recent quarterly experience.

**Receivables, inventory, payables and other operating assets and liabilities**

Post-holiday payables reduction and still-high inventory consume cash.

##### Capital spending

The category split is an analyst estimate using Apple's disclosed spending categories; it is not a disclosed company allocation.

| tooling | $875M |
| --- | --- |
| facilities | $500M |
| retail investments | $250M |
| data centers | $875M |
| Unallocated capital spending | $0 |
| Total capital spending | $2.50B |

**tooling** Analyst allocation; not company guidance.

“And as you know, our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.”

**facilities** Analyst allocation; not company guidance.

“And as you know, our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.”

**retail investments** Analyst allocation; not company guidance.

“And as you know, our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.”

**data centers** Analyst allocation; not company guidance.

“And as you know, our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.” “Cash generated by operating activities 116,996 81,754”

#### Three ways the low case happens

These levers explain the outcome together; each is not a separate one-in-ten event.

1. **Memory costs climb with no carry-in cushion** Management expects a decreasing benefit from carry-in memory inventory over time. Costlier memory flows straight into product cost, cutting gross margin below the holiday level and pulling earnings per share down faster than sales.
  Watch A March gross margin guide below the holiday quarter's range.
  **Analyst reasoning**
  - **Analyst A** Memory prices rise through the year with no let-up and the carry-in inventory benefit fades
  - **Analyst E** Persistent memory and component-cost inflation
  - **Analyst C** Memory prices keep rising through fiscal 2027 and the carry-in inventory benefit fades, pushing product gross margin below the December guide
2. **Higher prices weigh on post-holiday demand** Price increases on Mac, iPad and iPhone came just before a tough comparison with last year. Fewer upgrades cut March unit sales, and unsold inventory plus the seasonal payment of supplier bills shrink low-case free cash flow to an average of $23.5B.
  Watch Carrier and retailer promotions on new iPhones early in the calendar year.
  **Analyst reasoning**
  - **Analyst B** Consumer price elasticity and lengthening replacement cycles following the June and September product price increases and the tough comparison against the 21 percent iPhone growth in fiscal 2026.
  - **Analyst E** Demand elasticity after price increases and constrained supply
  - **Analyst G** Less affordable devices and slower upgrades after a strong prior cycle
3. **Services slow on licensing, gaming and regulation** Mobile gaming is weak and court rulings limit App Store fees. Services carry the highest margins, so slower services growth trims gross margin and earnings more than its share of sales suggests.
  Watch Holiday-quarter services growth below the guided range.
  **Analyst reasoning**
  - **Analyst C** Services decelerate below 8% on App Store link-out rulings, mobile gaming weakness and third-party licensing headwinds
  - **Analyst E** Slower services growth from licensing, gaming and regulation
  - **Analyst G** Weaker store and third-party licensing economics

Sales of $114.5B and earnings per share of $1.70 would need memory prices to keep climbing with no carry-in cushion left, higher device prices to weigh on post-holiday demand, and services to slow on licensing, gaming and regulation. Margin and volume fall together, so earnings drop more than sales. Analyst E goes furthest, with low-case sales of $108.0B and low-case earnings per share of $1.45, because it lets demand elasticity, slower services and elevated research and cloud costs all bite in the same quarter.

The company's own holiday guide already shows margin falling, and Analyst C widened its March low case after finding its tails the tightest of the seven.

The seven lows run from $108.0B (Analyst E) to $116.0B (Analyst A).

First sign The March-quarter outlook at the next report, date not given: low revenue growth with gross margin below the holiday range.

#### Surfaced outlier views

For Q2-FY2027 the seven analysts sit within 2.3% of the PricedIn number on sales and within 6.1% on diluted EPS. The furthest, and why:

- **Analyst E** · Q2-FY2027: sales **$117.9B**, the lowest of the seven (PricedIn $120.6B) and diluted EPS **$1.85**, the lowest of the seven (PricedIn $1.97)
  Why Analyst E has the smallest gross margin in dollars, $52.8B, and operating income of $31.8B against an average operating income of $34.2B. Its research spending of $13.1B sits above the average research spending of $12.8B, as it keeps research rising while product margins fall. That leaves net income of $26.6B.
  “My forecast slows operating-expense growth from fiscal 2026 but keeps absolute research spending rising, while lowering product margins through fiscal 2027.”

#### Watch

The company's March-quarter outlook at its next report, date not given: a strong revenue guide or a gross margin guide near the holiday range points higher; a margin guide well below it, or weak holiday services, points lower.

##### Sales

PricedIn **$512.0B** $490.0B – $543.0B

$490.0B $503.0B $512.0B $530.0B $543.0B

##### diluted EPS

PricedIn **$8.75** $7.70 – $9.85

$7.70 $8.25 $8.75 $9.25 $9.85

**Middle** the forecast **50% range** 1 in 4 chance the result comes in below this bar, 1 in 4 above it. Half the time it lands inside. **80% range** 1 in 10 chance below this line, 1 in 10 above it. These are the low and high printed by each number.

The analysts agree fiscal 2027 sales grow while earnings per share slip slightly, because memory costs and the end of tariff refunds outweigh higher prices. They differ on the second half: Analyst G keeps strong sales and earnings for the later quarters, while Analyst E lets memory and Siri AI costs reset margins hardest.

The analysts expect fiscal 2027 sales of about $512.0B, with memory costs keeping earnings per share just below last year's record.

Sales **$512.0B** +7% on FY2026

*50% range* $503.0B – $530.0B *80% range* $490.0B – $543.0B

Diluted EPS **$8.75**

*50% range* $8.25 – $9.25 *80% range* $7.70 – $9.85

Base case

Gross margin **45.5%** 48.8% in FY2026

Operating margin **29.5%** 33.0% in FY2026

#### Investment and cash generation

Base case

Capital spending **$11.0B**

Free cash flow **$141.7B**

Free cash flow: operating cash flow less capital spending.

- **Cash capital spending averages $11.0B, up from last year, for device tooling, Siri AI servers, facilities and stores. Free cash flow, defined here as operating cash flow less capital spending, averages $141.7B, held back by memory inventory and supplier prepayments. In the high case cash capital spending rises to $17.0B with free cash flow of $152.0B; low-case free cash flow averages $119.7B. *2 of 7***
  - **Analyst A** I set fiscal 2027 capital spending at about $13 billion against $9.0 billion in fiscal 2026, with most of the increase in tooling and data centres.
  - **Analyst F** Fiscal 2026 capital spending fell to $9.0 billion; I assume it rises back to $11 billion in fiscal 2027 for servers and the Houston plant.
  - **Analyst A** I keep a working-capital outflow in fiscal 2027 because memory inventory is being bought ahead of demand, and I raise capital spending to about $13 billion.

Fiscal 2026 was Apple's best year, with $478.8 billion in revenue, up 15% year-over-year. For fiscal 2027 the analysts' average sales forecast is $512.0B, putting sales growth at +6.9%, as price increases, the iPhone Duo and easing supply carry the year.

Earnings per share average $8.75, slightly below last year's record. Memory is the reason: the company sees memory prices rising beyond December, and last year's tariff refunds do not repeat, so the analysts put gross margin near +46% and operating margin near +30%.

Buybacks soften the blow. With net cash no longer a formal target and a further buyback authorization, most analysts shrink the share count steadily, which keeps earnings per share close to flat despite lower margins.

Middle sales forecasts run from $510.0B for the lowest analyst to sales of $524.0B for the highest, and middle earnings per share from $8.52 to earnings per share of $8.97. Analyst G expects the most sales, keeping its annual center despite a weaker March; Analyst E expects the least earnings, with the deepest margin reset.

The low case puts sales at $490.0B and earnings per share at $7.70; the high case puts sales at $543.0B and earnings per share at $9.85.

Earnings per share of about $8.75 rest on gross margin near +46%, operating margin near +30%, a tax rate near the guided level and a share count that buybacks keep shrinking.

#### Sales by quarter

Q3 FY25 $94.0B +10% · margin 46.5%

Q4 FY25 $102.5B +8% · margin 47.2%

Q1 FY26 $143.8B +16% · margin 48.2%

Q2 FY26 $111.2B +17% · margin 49.3%

Q3 FY26 $109.4B +16% · margin 50.1%

Q4 FY26 $114.5B +12% · margin 47.9%

Q1 FY27 $156.0B +9%

Each percent is on the same quarter a year earlier. The forecast rows are the PricedIn forecast.

#### The year forecast, line by line

| Line | FY2026 reported | FY2027 forecast |
| --- | --- | --- |
| Net sales | $478.8B | $512.0B |
| Sales growth, year on year | +15% | +7% |
| Products | $355.5B | $377.0B |
| Services | $123.3B | $135.0B |
| Operating segments |  |  |
| Americas | $198.1B | $212.0B |
| Europe | $127.6B | $137.0B |
| Greater China | $82.4B | $87.0B |
| Japan | $30.9B | $32.5B |
| Rest of Asia Pacific | $39.9B | $43.5B |
| Cost of sales |  |  |
| Products | $215.9B | $245.5B |
| Services | $29.4B | $33.5B |
| Cost of sales | $245.2B | $279.0B |
| Gross margin | $233.6B | $233.0B |
| Gross margin | 48.8% | 45.5% |
| Research and development | $45.8B | $51.4B |
| Selling, general and administrative | $29.8B | $30.7B |
| Total operating expenses | $75.5B | $82.1B |
| Operating income | $158.1B | $150.9B |
| Operating margin | 33.0% | 29.5% |
| Other income/(expense), net | $1.17B | $1.10B |
| Income before provision for income taxes | $159.2B | $152.0B |
| Provision for income taxes | $27.1B | $25.8B |
| Tax rate | 17.0% | 17.0% |
| Net income | $132.2B | $126.2B |
| Diluted (in shares) | — | 14.42B |
| Diluted EPS | — | $8.75 |

The lines as the company's statement shows them. A forecast year with a plan of its own is the tab's PricedIn forecast, one analyst's whole plan, the analyst nearest the middle of the seven on both sales and earnings per share, so the lines add up to the numbers above. Sales growth is the change on the same period a year earlier. A reported year's earnings per share is the company's own.

#### What it rests on

**Last year's revenue**

Company reported $478.8 billion in revenue, up 15% year-over-year “This performance marked our best fiscal year yet, with $478.8 billion in revenue, up 15% year-over-year, and a fiscal year record for EPS of $8.98, up 20% year-over-year.” Fourth-quarter fiscal 2026 earnings call

**Memory after December**

Memory purchase prices keep rising beyond December “And looking beyond the December quarter, we see the pricing for memory purchases continuing to increase. As we said before, we do believe we'll see a decreasing benefit from the carry-in inventory on memory over time.” Fourth-quarter fiscal 2026 earnings call

**Tariff refunds end**

Most tariff refunds were received by September “As of the September quarter, we have received the vast majority of the refunds related to tariffs paid.” Fourth-quarter fiscal 2026 earnings call

**Buyback policy**

Net cash neutral dropped as a formal target “As we move ahead, we are no longer providing net cash neutral as a formal target, and we will independently evaluate cash and debt.” Second-quarter fiscal 2026 earnings call

**Supply commitments**

Manufacturing purchase obligations rose sharply in one quarter “As we work to improve supply, our manufacturing purchase obligations have increased by $33 billion from June to the September quarter, which you'll see in our annual filing when it comes out tomorrow.” Fourth-quarter fiscal 2026 earnings call

#### Scenarios Explained: Base, Low, and High

Base the middle forecast

FY2027

Sales **$512.0B**

Diluted EPS **$8.75**

Capital spending **$11.0B**

Free cash flow **$141.7B**

**FCF walk and spending detail**

Forecast dollars. Free cash flow is operating cash flow less capital spending.

| Net income | $126.2B |
| --- | --- |
| Depreciation and amortization | $14.5B |
| Share-based compensation | $14.8B |
| Working capital | −$4.00B |
| Other operating items | $1.20B |
| Operating cash flow | $152.7B |
| Less capital spending | −$11.0B |
| Free cash flow | $141.7B |

**Net income**

Base full-year net income, $8.75 a share on 14.42 billion shares.

**Depreciation and amortization**

Above last year's $13.4 billion as assets grow.

**Share-based compensation**

Above last year's $13.8 billion.

**Working capital**

A modest use of cash. Last year's $8.9 billion inventory build does not repeat in full.

**Other operating items**

Near last year's other non-cash line of $568 million plus the rise in deferred revenue. Set from that history, not as a remainder.

##### Capital spending

Capital spending rises from $9.0 billion to $11 billion, mostly tooling and data centers. Facilities and stores, which the company also names, stay in the unallocated amount because no split was disclosed.

| tooling | $3.80B |
| --- | --- |
| data centers | $2.70B |
| Unallocated capital spending | $4.50B |
| Total capital spending | $11.0B |

**tooling** My allocation for the phone, Mac and tablet ramps. Not a company split.

“our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.”

**data centers** My allocation for private cloud. The hybrid model keeps a large share of compute in operating expense.

“our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.” “our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.”

#### Three ways the base case happens

These levers explain the outcome together.

1. **Price increases and the iPhone Duo ramp lift sales** Apple raised device prices in June and September, and the foldable iPhone Duo is ramping. Higher prices per device and Duo volume as supply eases carry sales growth through the year, though slower than last year's exceptional cycle; more sales help cover fixed operating costs.
  Watch iPhone Duo supply status at each quarterly report.
  **Analyst reasoning**
  - **Analyst F** iPhone pricing and the iPhone Duo ramp
  - **Analyst C** iPhone Duo ramps and Mac/iPad memory-driven supply constraints ease through fiscal 2027, keeping full-year revenue growth near 8%
  - **Analyst A** Revenue up about 7% for the year, led by iPhone, services and emerging markets
2. **Memory costs reset gross margin lower for the year** Management calls memory pricing unprecedented and sees prices rising beyond December. Gross margin near +46%, well below last year, absorbs most of the profit from higher sales, so earnings per share slip slightly despite growth. Memory buying also ties up cash in inventory and prepayments.
  Watch Each quarter's gross margin guide against the holiday quarter's range.
  **Analyst reasoning**
  - **Analyst C** Memory-cost inflation, called unprecedented by management, compresses fiscal 2027 gross margin to about 45.4% from 48.8% in fiscal 2026
  - **Analyst D** Gross margin at 45.5 percent in the holiday quarter and about 45.5 percent for the year, with memory the main drag and a richer services mix only a partial offset
  - **Analyst B** Near-term gross margin compression in fiscal 2027 from unprecedented memory price inflation, the roll-off of fiscal 2026 tariff refunds, and Siri artificial intelligence revenue deferrals and cloud inference costs
3. **Buybacks shrink the share count** Apple dropped net cash neutral as a target and authorized more repurchases. A smaller share count spreads net income across fewer shares, offsetting much of the margin decline in earnings per share; buybacks are funded from free cash flow.
  Watch Repurchase totals reported each quarter.
  **Analyst reasoning**
  - **Analyst C** Share count falls about 2% on roughly $100 billion of annual buybacks, offsetting most of the margin decline so EPS is roughly flat at about $8.83 versus $8.98
  - **Analyst B** Continued capital returns via roughly 90 billion dollars of annual share repurchases that reduce diluted share counts by about 2 percent per year.
  - **Analyst D** Share count declining about 2 percent a year as buybacks continue

Sales near $512.0B and earnings per share near $8.75 need price increases and the iPhone Duo ramp to lift sales as supply limits ease through the year, memory costs to hold gross margin near +46% without a further slide, operating margin near +30% as research spending growth slows, and buybacks to keep trimming the share count. No repeat of last year's tariff refunds is assumed.

High about 1 chance in 10 of better

FY2027

Sales **$543.0B** +6% vs base

Diluted EPS **$9.85** +13% vs base

Capital spending **$17.0B**

Free cash flow **$152.0B**

**FCF walk and spending detail**

Forecast dollars. Free cash flow is operating cash flow less capital spending.

| Net income consistent with the high annual EPS case | $143.2B |
| --- | --- |
| Depreciation, amortization and share-based compensation | $31.0B |
| Receivables, inventory, payables and other operating assets and liabilities | −$5.20B |
| Operating cash flow | $169.0B |
| Less capital spending | −$17.0B |
| Free cash flow | $152.0B |

**Net income consistent with the high annual EPS case**

High-case annual EPS applied to annual weighted-average diluted shares, rounded.

**Depreciation, amortization and share-based compensation**

Higher investment produces larger annual non-cash add-backs.

**Receivables, inventory, payables and other operating assets and liabilities**

Strong growth requires working capital, partly funded by payables and other liabilities.

##### Capital spending

Higher earnings support greater tooling and AI capacity spending. The category split is an analyst estimate, not company guidance or a disclosed allocation.

| tooling | $5.95B |
| --- | --- |
| facilities | $3.40B |
| retail investments | $1.70B |
| data centers | $5.95B |
| Unallocated capital spending | $0 |
| Total capital spending | $17.0B |

**tooling** Analyst annual allocation for higher product volume; not company guidance.

“And as you know, our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.”

**facilities** Analyst annual allocation; not company guidance.

“And as you know, our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.”

**retail investments** Analyst annual allocation; not company guidance.

“And as you know, our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.”

**data centers** Analyst annual allocation for additional AI and cloud capacity; not company guidance.

“And as you know, our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.” “Cash generated by operating activities 145,097 111,482”

#### Three ways the high case happens

These levers explain the outcome together; each is not a separate one-in-ten event.

1. **Supply catches up with iPhone Duo and Mac demand** Mac and iPad demand runs above plan and advanced-node constraints are easing. Shipping demand the base leaves unmet lifts sales across the year, and volume over fixed costs lifts earnings per share faster; the extra output needs more tooling, raising high-case cash capital spending to an average of $17.0B.
  Watch iPhone Duo shipping without delays early in the calendar year.
  **Analyst reasoning**
  - **Analyst C** iPhone Duo supply recovers faster than management's 'best view of constrained supply' and the foldable proves a runaway hit
  - **Analyst A** iPhone Duo and Mac supply normalize, letting constrained demand convert to sales
  - **Analyst E** Advanced-node and memory supply constraints ease
2. **Memory prices peak early** Long-term supply agreements and new memory capacity could slow price rises. Gross margin holds near the holiday guide instead of sliding, adding directly to earnings per share.
  Watch A March gross margin guide at or above the holiday range.
  **Analyst reasoning**
  - **Analyst A** Memory prices peak in the spring and the carry-in inventory benefit lasts longer
  - **Analyst D** Gross margin near 46.3 percent in the holiday quarter and about 47 percent for the year if memory prices peak earlier than the comments imply
  - **Analyst C** Memory inflation peaks early as long-term agreements and new supply kick in, holding gross margin near 46% through fiscal 2027
3. **Paid AI tiers and subscriptions lift services** Paid subscriptions keep growing and paid expanded Siri AI access is planned. Higher-margin services sales lift both sales and gross margin, with free cash flow rising to a high-case average of $152.0B.
  Watch Paid subscription counts and iCloud tier launches during the year.
  **Analyst reasoning**
  - **Analyst C** Siri AI monetization begins: paid iCloud+ tiers for server-side features, Maps ads, and record App Store engagement
  - **Analyst B** Accelerated services growth back above 12 percent annually as users upgrade to higher-priced iCloud Plus plans for expanded server-side Siri artificial intelligence capacity
  - **Analyst G** Growing cloud, advertising and subscription revenue

Sales of $543.0B and earnings per share of $9.85 would need iPhone Duo and Mac supply to catch up with demand, memory prices to peak early so gross margin holds near the top of the holiday guide, and paid AI tiers and subscriptions to lift services. Analyst G goes furthest, with high-case sales of $565.0B and high-case earnings per share of $10.90, because it pairs successful launches and easing supply with faster growth in cloud, advertising and subscriptions.

Management expects a record holiday quarter and says advanced-node chip constraints are easing; Mac and iPad demand already runs above its plans.

The seven highs run from $533.0B (Analyst A) to $565.0B (Analyst G).

First sign The holiday-quarter report, date not given: sales growth above the outlook's top with gross margin at the top of its guide.

Low about 1 chance in 10 of worse

FY2027

Sales **$490.0B** −4% vs base

Diluted EPS **$7.70** −12% vs base

Capital spending **$12.0B**

Free cash flow **$119.7B**

**FCF walk and spending detail**

Forecast dollars. Free cash flow is operating cash flow less capital spending.

| Net income | $109.4B |
| --- | --- |
| Depreciation and amortization | $15.5B |
| Share-based compensation expense | $15.2B |
| Other non-cash and operating items | $600M |
| Changes in operating assets and liabilities | −$9.00B |
| Operating cash flow | $131.7B |
| Less capital spending | −$12.0B |
| Free cash flow | $119.7B |

**Net income**

Low case net income of about $7.55 per diluted share on 14.49 billion shares.

**Depreciation and amortization**

Rising from $13.4 billion in fiscal 2026 as data-center and tooling investment grows.

**Share-based compensation expense**

Up modestly from $13.8 billion in fiscal 2026.

**Other non-cash and operating items**

Small net of other operating adjustments.

**Changes in operating assets and liabilities**

Memory inventory is bought ahead of demand, absorbing cash.

##### Capital spending

Fiscal 2026 capital spending was $9.0 billion; I raise it to about $12 billion in the low case as tooling, data centers and the Houston manufacturing and advanced manufacturing center work continue. The category split is my estimate, not a disclosed breakdown, and the unallocated part covers items I cannot responsibly assign. The $600 billion multi-year U.S. commitment is a broader programme that runs largely through supplier purchases, so I do not map it to this line.

| tooling | $5.76B |
| --- | --- |
| facilities | $1.44B |
| data centers | $2.40B |
| retail investments | $1.08B |
| Unallocated capital spending | $1.32B |
| Total capital spending | $12.0B |

**tooling** My estimate of manufacturing tooling and process equipment; not company guidance.

“our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers”

**facilities** My estimate of facilities spending; not company guidance.

“our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers”

**data centers** My estimate of first-party data-center and private cloud compute spending; part of Apple's AI compute runs on third-party capacity.

“our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers”

**retail investments** My estimate of retail store investment; not company guidance.

“our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers” “our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers” “we leverage a combination of first and third-party capacity”

#### Three ways the low case happens

These levers explain the outcome together; each is not a separate one-in-ten event.

1. **Memory keeps rising all year** Management sees memory prices rising beyond December and less benefit from carry-in inventory. Gross margin falls below the base path, cutting earnings per share far more than sales; inventory bought at high prices also absorbs cash, pulling low-case free cash flow to an average of $119.7B.
  Watch A March-quarter gross margin guide below the holiday range.
  **Analyst reasoning**
  - **Analyst A** Memory prices rise through the year with no let-up and the carry-in inventory benefit fades
  - **Analyst C** Memory prices keep rising through fiscal 2027 and the carry-in inventory benefit fades, pushing product gross margin below the December guide
  - **Analyst F** memory costs outrunning price increases
2. **Higher prices and weak consumers cut upgrades** Price increases followed a record iPhone year, and consumer sentiment is weak. Fewer upgrades cut unit sales, partly offset by higher prices; lower volume leaves fixed costs heavier, compressing operating margin.
  Watch Unit commentary or channel discounting after the holiday quarter.
  **Analyst reasoning**
  - **Analyst G** Less affordable devices and slower upgrades after a strong prior cycle
  - **Analyst B** Consumer price elasticity and lengthening replacement cycles following the June and September product price increases and the tough comparison against the 21 percent iPhone growth in fiscal 2026.
  - **Analyst A** Price increases on iPhone, Mac and iPad soften unit demand in the U.S. and Europe
3. **Services slow on court rulings and licensing** App Store rulings and a possible search remedy on appeal threaten high-margin fees. Losing high-margin services revenue cuts earnings per share disproportionately even when the sales loss is modest.
  Watch Services growth falling below the holiday-quarter guide.
  **Analyst reasoning**
  - **Analyst F** services growth slowing on App Store rulings and search licensing
  - **Analyst C** Services decelerate below 8% on App Store link-out rulings, mobile gaming weakness and third-party licensing headwinds
  - **Analyst B** Regulatory and antitrust headwinds on high-margin services

Sales of $490.0B and earnings per share of $7.70 would need memory prices to rise all year with the carry-in cushion gone, higher prices and weak consumer sentiment to cut upgrades after a strong cycle, and court rulings and licensing to slow services. Analyst E goes furthest, with low-case sales of $475.0B and low-case earnings per share of $7.45, because it adds elevated AI research and cloud costs to slower services and weaker demand.

Last year's gross margin carried one-time tariff refunds, so the year starts from a lower base, and management itself warns memory pressure continues beyond December.

The seven lows run from $475.0B (Analyst E) to $495.0B (Analyst B).

First sign The holiday-quarter report, date not given: gross margin at or below the guided floor with a weak March outlook.

#### Surfaced outlier views

For FY2027 the seven analysts sit within 2.3% of the PricedIn number on sales and within 2.6% on diluted EPS. The furthest, and why:

- **Analyst G** · FY2027: sales **$524.0B**, the highest of the seven (PricedIn $512.0B)
  Why Analyst G keeps its full-year sales center even after trimming its March quarter, expecting added capacity and delayed holiday shipments to fill the later quarters. That plan needs net income of $129.2B, with a strong second half, and its high case reaches earnings per share of $10.90, the highest of the seven.
  “I do not adopt A's lower annual sales center: capacity expansion and delayed shipments can still support my annual forecast.”
- **Analyst E** · FY2027: diluted EPS **$8.52**, the lowest of the seven (PricedIn $8.75)
  Why Analyst E carries the lowest operating margin of the seven, +28%, against an average operating margin of +30%, because memory costs and the Siri AI ramp reset gross margin while research spending keeps rising. That leaves net income of $121.4B.
  “Strong iPhone, Mac and services demand supports high-single-digit near-term sales growth, but memory costs and the Siri AI ramp cause a substantial fiscal 2027 margin reset and a small EPS decline.”

#### Watch

Each quarterly report, dates not given: gross margin guides at or above the holiday range, faster iPhone Duo supply and paid AI tiers point higher; margin guides sliding below it, weak upgrades or adverse App Store and search rulings point lower.

##### Sales

PricedIn **$544.0B** $504.0B – $590.0B

$504.0B $527.0B $544.0B $565.0B $590.0B

##### diluted EPS

PricedIn **$9.69** $8.10 – $11.50

$8.10 $8.90 $9.69 $10.65 $11.50

**Middle** the forecast **50% range** 1 in 4 chance the result comes in below this bar, 1 in 4 above it. Half the time it lands inside. **80% range** 1 in 10 chance below this line, 1 in 10 above it. These are the low and high printed by each number.

The analysts agree fiscal 2028 brings faster earnings growth than sales growth as memory costs ease, but differ on how fast. Analysts F and A expect the slowest margin recovery, while Analyst G expects margins and services to rebound fastest, giving it the highest sales and earnings.

The analysts expect fiscal 2028 sales of about $544.0B, with earnings growing faster as memory costs ease and margins partly recover.

Sales **$544.0B** +6% on FY2027

*50% range* $527.0B – $565.0B *80% range* $504.0B – $590.0B

Diluted EPS **$9.69** +11% on FY2027

*50% range* $8.90 – $10.65 *80% range* $8.10 – $11.50

Base case

Gross margin **46.3%** 45.5% in FY2027

Operating margin **29.7%** 29.5% in FY2027

#### Investment and cash generation

Base case

Capital spending **$15.0B**

Free cash flow **$145.0B**

Free cash flow: operating cash flow less capital spending.

- **Cash capital spending averages $15.0B in the base case, rising for data centers that serve Siri AI and tooling for the next product cycle. Free cash flow, defined here as operating cash flow less capital spending, averages $145.0B as memory prepayments ease and working capital absorbs less cash. In the high case cash capital spending rises to $20.0B with free cash flow of $178.0B; low-case free cash flow averages $124.7B. *3 of 7***
  - **Analyst G** my capital estimates rise moderately from the latest cash flow, with more data center and tooling spending.
  - **Analyst F** I assume $11 to $13 billion a year as server capacity grows.
  - **Analyst D** That is why capital spending rises only modestly, not to hyperscale levels, even as artificial-intelligence use grows.

Fiscal 2028 is the recovery year in most forecasts. The analysts' average sales forecast is $544.0B, putting sales growth at +6.2%, and their average earnings per share is $9.69, putting earnings per share growth at +11%.

The gap comes from margin. Several analysts expect memory prices to ease as new chip-making capacity arrives, letting gross margin recover partly to about +46%, still below fiscal 2026. Operating margin averages +30%.

Services matter more each year. The analysts expect services, built on a vast installed base and growing paid subscriptions, to outgrow devices, with new paid tiers for Siri AI as an upside.

Middle sales forecasts run from $540.6B for the lowest analyst to sales of $563.0B for the highest, and middle earnings per share from $9.35 to earnings per share of $10.19. Analyst G is highest on both, with the fastest margin recovery.

The low case puts sales at $504.0B and earnings per share at $8.10; the high case puts sales at $590.0B and earnings per share at $11.50. The range widens because memory, courts and the product cycle are all uncertain this far out.

Earnings per share of about $9.69 rest on gross margin recovering to about +46%, operating margin near +30%, services outgrowing devices and buybacks that keep cutting the share count.

#### Sales by year

FY2024 $391.0B +2%

FY2025 $416.2B +6%

FY2026 $478.8B +15%

FY2027 $512.0B +7%

FY2028 $544.0B +6%

FY2029 $577.0B +6%

The forecast years are the PricedIn forecast.

#### The year forecast, line by line

| Line | FY2026 reported | FY2027 forecast | FY2028 forecast |
| --- | --- | --- | --- |
| Net sales | $478.8B | $512.0B | $544.0B |
| Sales growth, year on year | +15% | +7% | +6% |
| Products | $355.5B | $377.0B | $394.8B |
| Services | $123.3B | $135.0B | $149.2B |
| Operating segments |  |  |  |
| Americas | $198.1B | $212.0B | $224.0B |
| Europe | $127.6B | $137.0B | $146.0B |
| Greater China | $82.4B | $87.0B | $94.0B |
| Japan | $30.9B | $32.5B | $35.0B |
| Rest of Asia Pacific | $39.9B | $43.5B | $45.0B |
| Cost of sales |  |  |  |
| Products | $215.9B | $245.5B | $255.6B |
| Services | $29.4B | $33.5B | $36.6B |
| Cost of sales | $245.2B | $279.0B | $292.1B |
| Gross margin | $233.6B | $233.0B | $251.9B |
| Gross margin | 48.8% | 45.5% | 46.3% |
| Research and development | $45.8B | $51.4B | $57.0B |
| Selling, general and administrative | $29.8B | $30.7B | $33.2B |
| Total operating expenses | $75.5B | $82.1B | $90.2B |
| Operating income | $158.1B | $150.9B | $161.7B |
| Operating margin | 33.0% | 29.5% | 29.7% |
| Other income/(expense), net | $1.17B | $1.10B | $1.20B |
| Income before provision for income taxes | $159.2B | $152.0B | $162.9B |
| Provision for income taxes | $27.1B | $25.8B | $27.4B |
| Tax rate | 17.0% | 17.0% | 16.8% |
| Net income | $132.2B | $126.2B | $135.5B |
| Diluted (in shares) | — | 14.42B | 13.98B |
| Diluted EPS | — | $8.75 | $9.69 |

The lines as the company's statement shows them. A forecast year with a plan of its own is the tab's PricedIn forecast, one analyst's whole plan, the analyst nearest the middle of the seven on both sales and earnings per share, so the lines add up to the numbers above. Sales growth is the change on the same period a year earlier. A reported year's earnings per share is the company's own.

#### What it rests on

**Paid subscriptions**

Paid subscriptions grew double digits to a new high “We also have over 1.5 billion paid subscriptions, which grew double digits during the quarter, reaching an all-time high.” Fourth-quarter fiscal 2026 earnings call

**Siri AI usage limits**

Server-side Siri AI features will carry usage limits “There's going to be some usage limits on features that rely on server-side models, which include Siri AI and intelligent photo editing, some other things like that.” Fourth-quarter fiscal 2026 earnings call

**Search licensing risk**

Search remedies could hurt licensing revenue “If implemented, these remedies could materially adversely affect the Company’s ability to earn revenue from such licensing arrangements.” Apple annual report, fiscal 2025

**Capital spending lines**

Tooling, facilities, retail stores and data centers “And as you know, our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.” First-quarter fiscal 2026 earnings call

**Buyback authorization**

Board authorized more repurchases and raised the dividend “Accordingly, our Board has authorized an additional $100 billion for share repurchases, and we're also raising our dividend by 4% to $0.27 per share of common stock.” Second-quarter fiscal 2026 earnings call

#### Scenarios Explained: Base, Low, and High

Base the middle forecast

FY2028

Sales **$544.0B**

Diluted EPS **$9.69**

Capital spending **$15.0B**

Free cash flow **$145.0B**

**FCF walk and spending detail**

Forecast dollars. Free cash flow is operating cash flow less capital spending.

| Net income consistent with the base annual EPS case | $135.5B |
| --- | --- |
| Depreciation, amortization and share-based compensation | $31.0B |
| Receivables, inventory, payables and other operating assets and liabilities | −$6.50B |
| Operating cash flow | $160.0B |
| Less capital spending | −$15.0B |
| Free cash flow | $145.0B |

**Net income consistent with the base annual EPS case**

Base-case annual net income, rounded from the annual statement plan.

**Depreciation, amortization and share-based compensation**

Non-cash add-backs rise with the investment base and compensation.

**Receivables, inventory, payables and other operating assets and liabilities**

Growth requires moderate net working-capital investment after fiscal 2027's inventory build.

##### Capital spending

Capital spending increases for product and AI capacity. The category split is an analyst estimate and not a company-disclosed allocation.

| tooling | $5.25B |
| --- | --- |
| facilities | $3.00B |
| retail investments | $1.50B |
| data centers | $5.25B |
| Unallocated capital spending | $0 |
| Total capital spending | $15.0B |

**tooling** Analyst annual allocation; not company guidance.

“And as you know, our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.”

**facilities** Analyst annual allocation; not company guidance.

“And as you know, our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.”

**retail investments** Analyst annual allocation; not company guidance.

“And as you know, our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.”

**data centers** Analyst annual allocation; not company guidance.

“And as you know, our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.” “Payments for acquisition of property, plant and equipment (9,041) (12,715)”

#### Three ways the base case happens

These levers explain the outcome together.

1. **Memory costs ease and gross margin partly recovers** Analysts expect new memory capacity, which takes well over a year to add, to slow price rises. A partial margin recovery adds more to earnings per share than sales growth alone, which is why earnings grow faster than sales; working capital also eases as memory prepayments shrink.
  Watch Gross margin guides late in fiscal 2027 moving back toward the top of the holiday range.
  **Analyst reasoning**
  - **Analyst C** assume recovery to 45.9% in fiscal 2028 and 46.3% in fiscal 2029
  - **Analyst B** allowing hardware gross margins to recover gradually in fiscal 2028 and fiscal 2029 after compressing in fiscal 2027
  - **Analyst D** is more likely to ease through fiscal 2028
2. **Services outgrow devices** Paid subscriptions keep growing on a large active-device base, with paid Siri AI tiers planned. Services carry higher margins, so a rising services share lifts gross margin and earnings per share alongside sales.
  Watch Services growth trend and paid subscription counts in quarterly reports.
  **Analyst reasoning**
  - **Analyst B** Double-digit services growth over the multi-year horizon driven by an active installed base exceeding 2.5 billion devices
  - **Analyst G** Recovery to roughly 11% annual services growth thereafter is my judgment
  - **Analyst E** Base services revenue follows the guidance midpoint and grows faster than products over the longer horizons.
3. **Buybacks keep cutting the share count** Apple keeps a large repurchase authorization and no longer targets net cash neutral. Fewer shares lift earnings per share faster than net income; repurchases draw on free cash flow.
  Watch Quarterly repurchase totals and any new authorization.
  **Analyst reasoning**
  - **Analyst F** Buybacks continue near $90 billion a year, so diluted shares fall about 2% a year in my plan
  - **Analyst A** which support my assumption that the diluted share count keeps drifting down about 2% a year.
  - **Analyst B** Continued capital returns via roughly 90 billion dollars of annual share repurchases that reduce diluted share counts by about 2 percent per year.

Sales near $544.0B and earnings per share near $9.69 need memory prices to ease as new supply arrives, letting gross margin recover partly to about +46%; services to outgrow devices on the installed base and paid subscriptions; operating margin near +30%; and buybacks that keep shrinking the share count.

High about 1 chance in 10 of better

FY2028

Sales **$590.0B** +8% vs base

Diluted EPS **$11.50** +19% vs base

Capital spending **$20.0B**

Free cash flow **$178.0B**

**FCF walk and spending detail**

Forecast dollars. Free cash flow is operating cash flow less capital spending.

| Net income consistent with the high annual EPS case | $169.3B |
| --- | --- |
| Depreciation, amortization and share-based compensation | $32.0B |
| Receivables, inventory, payables and other operating assets and liabilities | −$3.30B |
| Operating cash flow | $198.0B |
| Less capital spending | −$20.0B |
| Free cash flow | $178.0B |

**Net income consistent with the high annual EPS case**

High-case annual EPS applied to annual weighted-average diluted shares, rounded.

**Depreciation, amortization and share-based compensation**

Higher investment produces larger non-cash add-backs.

**Receivables, inventory, payables and other operating assets and liabilities**

Strong growth requires working capital, largely offset by supplier and other liabilities.

##### Capital spending

The high case funds greater product and AI capacity. The category split is an analyst estimate and not a company-disclosed allocation.

| tooling | $7.00B |
| --- | --- |
| facilities | $4.00B |
| retail investments | $2.00B |
| data centers | $7.00B |
| Unallocated capital spending | $0 |
| Total capital spending | $20.0B |

**tooling** Analyst annual allocation; not company guidance.

“And as you know, our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.”

**facilities** Analyst annual allocation; not company guidance.

“And as you know, our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.”

**retail investments** Analyst annual allocation; not company guidance.

“And as you know, our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.”

**data centers** Analyst annual allocation; not company guidance.

“And as you know, our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.” “Payments for acquisition of property, plant and equipment (9,041) (12,715)”

#### Three ways the high case happens

These levers explain the outcome together; each is not a separate one-in-ten event.

1. **Memory prices fall back and margins rebound faster** New memory capacity could arrive sooner than the base assumes. Faster margin recovery adds directly to earnings per share and lifts high-case free cash flow to an average of $178.0B.
  Watch Falling memory contract prices during fiscal 2028.
  **Analyst reasoning**
  - **Analyst B** Faster moderation in memory component costs combined with premium product mix and operating expense discipline
  - **Analyst A** Memory prices peak in the spring and the carry-in inventory benefit lasts longer
  - **Analyst E** Gross-margin recovery and disciplined operating-expense growth
2. **Foldables and new devices widen the upgrade wave** Analysts see easing chip and foldable assembly bottlenecks lifting premium models. More premium units raise sales and mix, and the extra volume needs more tooling, lifting high-case cash capital spending to an average of $20.0B.
  Watch Second-generation iPhone Duo demand at launch.
  **Analyst reasoning**
  - **Analyst B** Rapid easing of two-nanometer silicon and foldable assembly bottlenecks
  - **Analyst G** Successful new-phone and Mac launches with easing supply constraints
  - **Analyst E** Premium iPhone Duo, iPhone 18 Pro and Mac mix supports pricing
3. **Paid AI tiers push services higher** Paid expanded Siri AI access and new advertising inventory are new revenue lines. Higher-margin services sales lift gross margin and earnings per share.
  Watch Paid Siri AI tier take-up disclosed on quarterly calls.
  **Analyst reasoning**
  - **Analyst B** Accelerated services growth back above 12 percent annually as users upgrade to higher-priced iCloud Plus plans for expanded server-side Siri artificial intelligence capacity
  - **Analyst C** Siri AI monetization begins: paid iCloud+ tiers for server-side features, Maps ads, and record App Store engagement
  - **Analyst G** Growing cloud, advertising and subscription revenue

Sales of $590.0B and earnings per share of $11.50 would need memory prices to fall back faster so margins rebound, foldables and new devices to widen the upgrade wave, and paid AI tiers to push services growth higher. Analyst G goes furthest, with high-case sales of $635.0B and high-case earnings per share of $13.40, because it adds fast growth in cloud, advertising and subscriptions to easing supply and better component costs.

Several analysts note memory price spikes have historically faded within roughly a year and a half to two years, which would put relief inside fiscal 2028.

The seven highs run from $570.0B (Analyst A) to $635.0B (Analyst G).

First sign Gross margin guides moving above the holiday-quarter range during fiscal 2027.

Low about 1 chance in 10 of worse

FY2028

Sales **$504.0B** −7% vs base

Diluted EPS **$8.10** −16% vs base

Capital spending **$11.0B**

Free cash flow **$124.7B**

**FCF walk and spending detail**

Forecast dollars. Free cash flow is operating cash flow less capital spending.

| Net income | $111.9B |
| --- | --- |
| Depreciation and amortization | $15.5B |
| Share-based compensation expense | $15.8B |
| Other | $500M |
| Changes in operating assets and liabilities | −$8.00B |
| Operating cash flow | $135.7B |
| Less capital spending | −$11.0B |
| Free cash flow | $124.7B |

**Net income**

Low-case earnings per share of about $7.90 on 14.17 billion shares.

**Depreciation and amortization**

Rising with server spending.

**Share-based compensation expense**

Growing about 7%.

**Other**

Small.

**Changes in operating assets and liabilities**

Continued supply prepayments.

##### Capital spending

No company split by line; all unallocated.

| Unallocated capital spending | $11.0B |
| --- | --- |
| Total capital spending | $11.0B |

“our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.”

#### Three ways the low case happens

These levers explain the outcome together; each is not a separate one-in-ten event.

1. **Memory stays expensive into fiscal 2028** Some analysts allow for memory contracts resetting at peak prices for longer. Gross margin fails to recover, removing most of the base case's earnings growth, and memory buying keeps absorbing cash, cutting low-case free cash flow to an average of $124.7B.
  Watch Memory contract prices still rising through calendar 2027.
  **Analyst reasoning**
  - **Analyst B** prolonged memory supply shortages and escalating DRAM and NAND component costs would have to compress hardware gross margins throughout fiscal 2027 and fiscal 2028
  - **Analyst F** Memory prices keep climbing faster than Apple's price increases can offset, the carry-in inventory benefit runs out
  - **Analyst C** the weakness carries into fiscal 2028 (EPS about $8.10)
2. **Upgrades slow after the strong cycle** Last year's iPhone growth was exceptional and prices have since risen. Weaker device volume cuts sales and leaves fixed costs heavier, compressing operating margin.
  Watch iPhone sales falling on a year earlier during fiscal 2028.
  **Analyst reasoning**
  - **Analyst G** Less affordable devices and slower upgrades after a strong prior cycle
  - **Analyst B** Consumer price elasticity and lengthening replacement cycles following the June and September product price increases and the tough comparison against the 21 percent iPhone growth in fiscal 2026.
  - **Analyst C** Greater China's two huge years mean very tough comparisons
3. **Court rulings cut services licensing** A reversal on appeal could bar Google's search payments; App Store fees face court limits. Losing high-margin licensing revenue hits earnings per share far harder than sales.
  Watch An appeals ruling in the Google search case.
  **Analyst reasoning**
  - **Analyst F** Search licensing and App Store rulings are downside risks to services; they widen the low end of the later years but I do not cut the middle.
  - **Analyst C** They justify the low tails on fiscal 2028-29 EPS and services revenue
  - **Analyst B** We incorporated this structural regulatory risk into our multi-year low case for services growth and operating margins.

Sales of $504.0B and earnings per share of $8.10 would need memory to stay expensive into fiscal 2028, upgrades to slow after the strong cycle and higher prices, and court rulings to cut services licensing or App Store fees. Analyst G goes furthest on sales, with low-case sales of $480.0B, because it lets slower upgrades and weaker store and licensing economics build over two to three years. Analyst E goes furthest on earnings, with low-case earnings per share of $7.40, because margins in its low case recover only slowly through fiscal 2029.

No specific fine or remedy is in any middle forecast; the analysts place search licensing and App Store rulings in the low tail because no amount or date can be estimated.

The seven lows run from $480.0B (Analyst G) to $515.0B (Analyst B).

First sign Gross margin guides through fiscal 2027 showing no recovery as memory prices keep rising.

#### Surfaced outlier views

For FY2028 the seven analysts sit within 3.5% of the PricedIn number on sales and within 5.2% on diluted EPS. The furthest, and why:

- **Analyst G** · FY2028: sales **$563.0B**, the highest of the seven (PricedIn $544.0B) and diluted EPS **$10.19**, the highest of the seven (PricedIn $9.69)
  Why Analyst G recovers gross margin faster than the others, to +47% against an average gross margin of +46%, and operating margin to +31%. It assumes services growth recovers on advertising, cloud subscriptions and the installed base, giving net income of $143.9B.
  “Recovery to roughly 11% annual services growth thereafter is my judgment, with advertising, cloud subscriptions and installed-base growth offsetting some licensing and store pressure.”

#### Watch

Memory contract prices through calendar 2027, the pace of services growth and the Google search appeal: easing memory and faster services point higher; prices still rising or an adverse ruling point lower.

##### Sales

PricedIn **$577.0B** $520.0B – $640.0B

$520.0B $550.0B $577.0B $605.0B $640.0B

##### diluted EPS

PricedIn **$10.68** $8.55 – $13.00

$8.55 $9.60 $10.68 $11.90 $13.00

**Middle** the forecast **50% range** 1 in 4 chance the result comes in below this bar, 1 in 4 above it. Half the time it lands inside. **80% range** 1 in 10 chance below this line, 1 in 10 above it. These are the low and high printed by each number.

The analysts agree margins recover only partly by fiscal 2029 and that services and buybacks drive earnings growth. They differ on the tails and on investment: Analyst G sees the fullest margin recovery and the widest range, Analysts A and C spend most on capital, and Analyst C expects the slowest margin gains.

The analysts expect fiscal 2029 sales of about $577.0B, with margins still recovering and services taking a larger share.

Sales **$577.0B** +6% on FY2028

*50% range* $550.0B – $605.0B *80% range* $520.0B – $640.0B

Diluted EPS **$10.68** +10% on FY2028

*50% range* $9.60 – $11.90 *80% range* $8.55 – $13.00

Base case

Gross margin **47.0%** 46.3% in FY2028

Operating margin **30.3%** 29.7% in FY2028

#### Investment and cash generation

Base case

Capital spending **$16.0B**

Free cash flow **$157.0B**

Free cash flow: operating cash flow less capital spending.

- **Cash capital spending averages $16.0B in the base case, mostly data centers for Siri AI and tooling for new products, plus facilities and stores; the analysts see no hyperscale-style surge. Free cash flow, defined here as operating cash flow less capital spending, averages $157.0B, with working capital a small drag as sales grow. Low-case free cash flow averages $127.6B and high-case free cash flow averages $198.4B, moving with each case's earnings. *3 of 7***
  - **Analyst D** That is why capital spending rises only modestly, not to hyperscale levels, even as artificial-intelligence use grows.
  - **Analyst C** They do inform the direction of my capex growth (rising from about $12.5 billion in fiscal 2027 to about $17.5 billion in fiscal 2029 in my estimate).
  - **Analyst G** my capital estimates rise moderately from the latest cash flow, with more data center and tooling spending.

By fiscal 2029 the forecasts rest on judgment more than company guidance. The analysts' average sales forecast is $577.0B, putting sales growth at +6.1%, and their average earnings per share is $10.68, putting earnings per share growth at +10%.

Most analysts expect the memory squeeze to be over, with gross margin near +47% and operating margin near +30%, still short of fiscal 2026 levels. Services, with higher margins, keep growing faster than devices.

Buybacks keep shrinking the share count, and capital spending keeps rising for data centers and tooling, though analysts differ on how much: Analysts A and C put base capital spending at $17.5B, while Analyst D puts base capital spending at $12.5B.

Middle sales forecasts run from $570.3B for the lowest analyst to sales of $604.0B for the highest, and middle earnings per share from $10.15 to earnings per share of $11.60. Analyst G again sits highest, with the fullest margin recovery.

The low case puts sales at $520.0B and earnings per share at $8.55; the high case puts sales at $640.0B and earnings per share at $13.00. Memory, regulation and the product cycle all compound over three years.

Earnings per share of about $10.68 rest on gross margin near +47%, operating margin near +30%, services outgrowing devices and a share count that buybacks keep shrinking.

#### Each analyst's growth in FY2029

Analyst F +5%

Analyst G +7%

Analyst C +5%

Analyst A +6%

Analyst E +6%

Analyst B +7%

Analyst D +6%

Growth of each analyst's middle on its own forecast for the year before.

#### The year forecast, line by line

| Line | FY2027 forecast | FY2028 forecast | FY2029 forecast |
| --- | --- | --- | --- |
| Net sales | $512.0B | $544.0B | $577.0B |
| Sales growth, year on year | +7% | +6% | +6% |
| Products | $377.0B | $394.8B | $415.0B |
| Services | $135.0B | $149.2B | $162.0B |
| Operating segments |  |  |  |
| Americas | $212.0B | $224.0B | $237.0B |
| Europe | $137.0B | $146.0B | $154.5B |
| Greater China | $87.0B | $94.0B | $100.5B |
| Japan | $32.5B | $35.0B | $37.0B |
| Rest of Asia Pacific | $43.5B | $45.0B | $48.0B |
| Cost of sales |  |  |  |
| Products | $245.5B | $255.6B | $266.9B |
| Services | $33.5B | $36.6B | $38.9B |
| Cost of sales | $279.0B | $292.1B | $305.8B |
| Gross margin | $233.0B | $251.9B | $271.2B |
| Gross margin | 45.5% | 46.3% | 47.0% |
| Research and development | $51.4B | $57.0B | $61.0B |
| Selling, general and administrative | $30.7B | $33.2B | $35.5B |
| Total operating expenses | $82.1B | $90.2B | $96.5B |
| Operating income | $150.9B | $161.7B | $174.7B |
| Operating margin | 29.5% | 29.7% | 30.3% |
| Other income/(expense), net | $1.10B | $1.20B | $1.20B |
| Income before provision for income taxes | $152.0B | $162.9B | $175.9B |
| Provision for income taxes | $25.8B | $27.4B | $29.5B |
| Tax rate | 17.0% | 16.8% | 16.8% |
| Net income | $126.2B | $135.5B | $146.3B |
| Diluted (in shares) | 14.42B | 13.98B | 13.70B |
| Diluted EPS | $8.75 | $9.69 | $10.68 |

The lines as the company's statement shows them. A forecast year with a plan of its own is the tab's PricedIn forecast, one analyst's whole plan, the analyst nearest the middle of the seven on both sales and earnings per share, so the lines add up to the numbers above. Sales growth is the change on the same period a year earlier. A reported year's earnings per share is the company's own.

#### What it rests on

**European fine risk**

Commission could fine up to a share of worldwide sales “If the Commission makes a final determination in the Article 6(4) Investigation that there has been a violation, it can issue a cease and desist order and may impose fines up to 10% of the Company’s annual worldwide net sales.” Apple annual report, fiscal 2025

**Single-product reliance**

A large share of sales comes from one product “Further, the Company generates a significant portion of its net sales from a single product and a decline in demand for that product could significantly impact quarterly net sales.” Apple annual report, fiscal 2024

**American investment pledge**

Multi-year commitment to American innovation and manufacturing “It's all part of our $600 billion four-year commitment to U.S. innovation and advanced manufacturing.” Fourth-quarter fiscal 2026 earnings call

**AI and revenue**

Management sees many ways AI can add revenue “And we also see a wide range of ways that AI can contribute to revenue growth over time.” Fourth-quarter fiscal 2026 earnings call

**Hybrid computing capacity**

Mix of owned and third-party data-center capacity “And on tooling and data centers, we leverage this hybrid model that I mentioned before, which we leverage a combination of first and third-party capacity.” First-quarter fiscal 2026 earnings call

#### Scenarios Explained: Base, Low, and High

Base the middle forecast

FY2029

Sales **$577.0B**

Diluted EPS **$10.68**

Capital spending **$16.0B**

Free cash flow **$157.0B**

**FCF walk and spending detail**

Forecast dollars. Free cash flow is operating cash flow less capital spending.

| Net income consistent with the base annual EPS case | $146.3B |
| --- | --- |
| Depreciation, amortization and share-based compensation | $32.0B |
| Receivables, inventory, payables and other operating assets and liabilities | −$5.30B |
| Operating cash flow | $173.0B |
| Less capital spending | −$16.0B |
| Free cash flow | $157.0B |

**Net income consistent with the base annual EPS case**

Base-case annual net income, rounded from the annual statement plan.

**Depreciation, amortization and share-based compensation**

Non-cash add-backs rise with the investment base and compensation.

**Receivables, inventory, payables and other operating assets and liabilities**

Sales growth requires moderate net working-capital investment.

##### Capital spending

Capital spending rises modestly for product and AI capacity. The category split is an analyst estimate and not a company-disclosed allocation.

| tooling | $5.60B |
| --- | --- |
| facilities | $3.20B |
| retail investments | $1.60B |
| data centers | $5.60B |
| Unallocated capital spending | $0 |
| Total capital spending | $16.0B |

**tooling** Analyst annual allocation; not company guidance.

“And as you know, our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.”

**facilities** Analyst annual allocation; not company guidance.

“And as you know, our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.”

**retail investments** Analyst annual allocation; not company guidance.

“And as you know, our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.”

**data centers** Analyst annual allocation; not company guidance.

“And as you know, our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.” “Payments for acquisition of property, plant and equipment (9,041) (12,715)”

#### Three ways the base case happens

These levers explain the outcome together.

1. **Gross margin keeps recovering as memory normalizes** Analysts expect new memory capacity and annualized price increases to restore margin gradually. Each step of margin recovery lifts earnings per share faster than sales; it is the main reason earnings growth outpaces sales growth.
  Watch Gross margin guides during fiscal 2028 approaching pre-spike levels.
  **Analyst reasoning**
  - **Analyst C** assume recovery to 45.9% in fiscal 2028 and 46.3% in fiscal 2029 as memory inflation peaks and the September 2026 iPhone price increase annualizes
  - **Analyst F** This assumption sets the slow margin recovery in the later years.
  - **Analyst G** Annual base gross margins remain 45.5%, 46.75% and 48% in fiscal 2027, 2028 and 2029
2. **Services take a larger share of sales** Services grow on the installed base and paid subscriptions, and carry higher margins. A rising services share lifts gross margin and steadies earnings, cushioning slower device growth.
  Watch Services growth staying ahead of device growth during fiscal 2028.
  **Analyst reasoning**
  - **Analyst B** as memory pricing normalizes and services mix rises
  - **Analyst E** Base services revenue follows the guidance midpoint and grows faster than products over the longer horizons.
  - **Analyst G** Recovery to roughly 11% annual services growth thereafter is my judgment
3. **Steady buybacks shrink the share count** Apple returns excess cash to shareholders and no longer targets net cash neutral. Fewer shares lift earnings per share beyond net income growth; free cash flow funds the repurchases.
  Watch Repurchase pace in fiscal 2028 reports.
  **Analyst reasoning**
  - **Analyst G** I forecast diluted weighted-average shares falling gradually from about 14.5 billion in December to 13.8 billion in fiscal 2029, less aggressive than assuming all free cash is repurchased.
  - **Analyst F** (14.47 billion in fiscal 2027, 14.17 and 13.88 billion after)
  - **Analyst B** Continued capital returns via roughly 90 billion dollars of annual share repurchases that reduce diluted share counts by about 2 percent per year.

Sales near $577.0B and earnings per share near $10.68 need memory costs to have normalized so gross margin reaches about +47%, services to keep outgrowing devices, operating margin near +30% as research spending growth slows, and buybacks to keep trimming the share count.

High about 1 chance in 10 of better

FY2029

Sales **$640.0B** +11% vs base

Diluted EPS **$13.00** +22% vs base

Capital spending **$15.0B**

Free cash flow **$198.4B**

**FCF walk and spending detail**

Forecast dollars. Free cash flow is operating cash flow less capital spending.

| Net income | $178.8B |
| --- | --- |
| Depreciation and amortization | $16.5B |
| Share-based compensation | $16.5B |
| Working capital | $200M |
| Other operating items | $1.50B |
| Operating cash flow | $213.4B |
| Less capital spending | −$15.0B |
| Free cash flow | $198.4B |

**Net income**

High-case fiscal 2029 earnings of $13.00 a share on about 13.75 billion shares.

**Depreciation and amortization**

Higher with a larger asset base.

**Share-based compensation**

Slightly above the base.

**Working capital**

Roughly neutral if sell-through stays strong.

**Other operating items**

A bit above last year if services grow faster. Not a remainder.

##### Capital spending

The high case spends $15 billion, still far below a hyperscale budget. Facilities and stores remain unallocated.

| tooling | $5.00B |
| --- | --- |
| data centers | $4.00B |
| Unallocated capital spending | $6.00B |
| Total capital spending | $15.0B |

**tooling** Higher forecast tooling.

“our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.”

**data centers** Higher forecast private-cloud spending.

“our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.” “our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.”

#### Three ways the high case happens

These levers explain the outcome together; each is not a separate one-in-ten event.

1. **Paid AI services and advertising scale** Paid Siri AI tiers and new advertising inventory are planned or starting. High-margin services growth lifts sales and gross margin together.
  Watch Paid Siri AI revenue discussed on quarterly calls.
  **Analyst reasoning**
  - **Analyst C** Siri AI monetization begins: paid iCloud+ tiers for server-side features, Maps ads, and record App Store engagement
  - **Analyst G** Growing cloud, advertising and subscription revenue
  - **Analyst B** Accelerated services growth back above 12 percent annually as users upgrade to higher-priced iCloud Plus plans for expanded server-side Siri artificial intelligence capacity
2. **Gross margin returns toward its old high** Memory relief plus richer services and premium device mix could restore margin. A fuller margin recovery supplies most of the high case's extra earnings and lifts high-case free cash flow to an average of $198.4B.
  Watch Gross margin guides above the holiday-2026 range.
  **Analyst reasoning**
  - **Analyst B** drives double-digit revenue growth and gross margin expansion toward 49.0 percent by fiscal 2029
  - **Analyst E** Gross-margin recovery and disciplined operating-expense growth
  - **Analyst A** Price increases hold with limited elasticity, protecting product gross profit dollars
3. **New devices widen the product cycle** Foldables and new computers could extend the upgrade wave. Premium units add sales and mix; more volume needs more tooling and capacity spending.
  Watch Successful launches of new device categories.
  **Analyst reasoning**
  - **Analyst E** Premium iPhone Duo, iPhone 18 Pro and Mac mix supports pricing
  - **Analyst G** Successful new-phone and Mac launches with easing supply constraints
  - **Analyst B** Rapid easing of two-nanometer silicon and foldable assembly bottlenecks

Sales of $640.0B and earnings per share of $13.00 would need paid AI services and advertising to scale, gross margin to return toward its pre-spike high, and new devices to widen the product cycle. Analyst G goes furthest, with high-case sales of $715.0B and high-case earnings per share of $15.80, because it compounds faster cloud, advertising and subscription growth with better component costs over three years.

Management says it sees a wide range of ways AI can add revenue over time, but it has not sized any of them.

The seven highs run from $605.0B (Analyst A) to $715.0B (Analyst G).

First sign Gross margin back near fiscal 2026 levels during fiscal 2028.

Low about 1 chance in 10 of worse

FY2029

Sales **$520.0B** −10% vs base

Diluted EPS **$8.55** −20% vs base

Capital spending **$12.0B**

Free cash flow **$127.6B**

**FCF walk and spending detail**

Forecast dollars. Free cash flow is operating cash flow less capital spending.

| Net income | $113.8B |
| --- | --- |
| Depreciation and amortization | $16.5B |
| Share-based compensation expense | $16.8B |
| Other | $500M |
| Changes in operating assets and liabilities | −$8.00B |
| Operating cash flow | $139.6B |
| Less capital spending | −$12.0B |
| Free cash flow | $127.6B |

**Net income**

Low-case earnings per share of about $8.20 on 13.88 billion shares.

**Depreciation and amortization**

Rising slowly.

**Share-based compensation expense**

Growing about 6%.

**Other**

Small.

**Changes in operating assets and liabilities**

Weak sales reduce payables.

##### Capital spending

No company split by line; all unallocated.

| Unallocated capital spending | $12.0B |
| --- | --- |
| Total capital spending | $12.0B |

“our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.”

#### Three ways the low case happens

These levers explain the outcome together; each is not a separate one-in-ten event.

1. **Memory costs never fully reverse** Analysts cannot see the memory cycle this far out; a longer shortage blocks recovery. Gross margin stays near its fiscal 2027 low, erasing the base case's margin-driven earnings growth and cutting low-case free cash flow to an average of $127.6B.
  Watch Memory prices still elevated into fiscal 2028.
  **Analyst reasoning**
  - **Analyst F** the low case covers prices staying high for longer
  - **Analyst A** Memory prices rise through the year with no let-up and the carry-in inventory benefit fades
  - **Analyst C** Memory-cost inflation squeezes product gross margin harder than the December guide anticipates and the carry-in inventory buffer runs out
2. **Regulators cut services revenue or impose fines** European fines and a Google search remedy remain possible but untimed. Losing high-margin licensing and App Store fees cuts earnings per share far more than sales; a large fine would also take cash in the year it lands.
  Watch A final European decision in the Article 6(4) investigation.
  **Analyst reasoning**
  - **Analyst C** no specific dollar amount is estimable, so they move the low side only
  - **Analyst F** A large European fine is possible but not timed; it sits in the low tail, not the middle.
  - **Analyst G** Memory, price sensitivity, concentrated suppliers and search distribution remedies widen the downside, particularly over two to three years.
3. **Device upgrades stall** A strong cycle can pause replacements, and price increases reduce demand with a lag. Lower device volume cuts sales and operating leverage, leaving services to carry growth.
  Watch iPhone sales falling on a year earlier through fiscal 2028.
  **Analyst reasoning**
  - **Analyst G** These general industry judgments shape slowing near-term growth, wider multi-year tails and a gradual rather than immediate margin recovery.
  - **Analyst B** Consumer price elasticity and lengthening replacement cycles following the June and September product price increases and the tough comparison against the 21 percent iPhone growth in fiscal 2026.
  - **Analyst C** before a weak recovery in fiscal 2029

Sales of $520.0B and earnings per share of $8.55 would need memory costs never fully to reverse, regulators to cut services revenue or impose a large fine, and device upgrades to stall after price increases. Analyst G goes furthest, with low-case sales of $478.0B and low-case earnings per share of $7.10, because it lets memory, price sensitivity, concentrated suppliers and search remedies compound over two to three years.

The European Commission can fine up to a share of worldwide sales, and a search remedy could cut licensing revenue; the analysts place these only in the low tail.

The seven lows run from $478.0B (Analyst G) to $540.0B (Analyst A).

First sign Gross margin still near fiscal 2027 levels during fiscal 2028.

#### Surfaced outlier views

For FY2029 the seven analysts sit within 4.7% of the PricedIn number on sales and within 8.6% on diluted EPS. The furthest, and why:

- **Analyst G** · FY2029: sales **$604.0B**, the highest of the seven (PricedIn $577.0B) and diluted EPS **$11.60**, the highest of the seven (PricedIn $10.68)
  Why Analyst G's gross margin reaches +48% against an average gross margin of +47%, and its operating margin reaches +32%, the fullest recovery of the seven. Combined with faster services growth, that gives net income of $160.6B.
  “Annual base gross margins remain 45.5%, 46.75% and 48% in fiscal 2027, 2028 and 2029, with diluted earnings about $8.97, $10.19 and $11.60.”

#### Watch

The gross margin trend through fiscal 2028, services and paid AI growth, and regulatory rulings in Europe and on search: margin back near past highs and paid AI take-up point higher; stuck margins, fines or lost licensing point lower.

The years at a glance · sales

FY2024 **$391.0B**

FY2025 **$416.2B**

FY2026 **$478.8B**

FY2027 **$512.0B** $490.0B – $543.0B

FY2028 **$544.0B** $504.0B – $590.0B

FY2029 **$577.0B** $520.0B – $640.0B

$400B $500B $600B

50% range 80% range

The years at a glance · diluted EPS

FY2024 **$6.08**

FY2025 **$7.46**

FY2027 **$8.75** $7.70 – $9.85

FY2028 **$9.69** $8.10 – $11.50

FY2029 **$10.68** $8.55 – $13.00

$6.00 $8.00 $10.00 $12.00

50% range 80% range