# AAPL Quarter forecast · Q1 FY27

> Apple reports Q1 FY27 in January 2027. Date not yet set. Our numbers below have a cutoff of 3 November 2026, 04:12 ET and do not change.

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

cutoff 3 November 2026, 04:12 ET

Apple reports Q1 FY27 in January 2027. Date not yet set. Our numbers below have a cutoff of 3 November 2026, 04:12 ET and do not change.

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

## AAPL reports Q1 FY27

The report date is not in the calendar yet.

Next report · 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

### Q1 FY27 · the quarter AAPL reports

##### 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.

### Q2 FY27 · the quarter after

##### 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.

#### 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.