# AAPL Full forecast · Q4 FY26

> 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: Q4 FY26 on 2 November at about 16:30 ET.

Canonical: https://pricedin.markets/aapl/fq4-2026/forecast/

cutoff 18 October 2026, 06:44 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: Q4 FY26 on 2 November at about 16:30 ET.

[Quarter forecast →](https://pricedin.markets/aapl/fq4-2026/preview/)

AAPL · as of 2026-10-18 06:44:51 ET · 5 AI analysts · 80% ranges, 1 in 10 to 9 in 10

## Sales and earnings outlook

Next quarter · Q4 FY26

Sales $113B +10% on Q4 FY25

Diluted EPS $1.98 +7% on Q4 FY25

Quarter after · Q1 FY27

Sales $155B +8% on Q1 FY26

Diluted EPS $3.00 +6% on Q1 FY26

This year · FY2026

Sales $477B +15% on FY2025

Diluted EPS $8.86 +19% on FY2025

Next year · FY2027

Sales $507B +6% on FY2026

Diluted EPS $9.00 +2% on FY2026

Year +2 · FY2028

Sales $537B +6% on FY2027

Diluted EPS $10.00 +11% on FY2027

##### Sales

PricedIn **$113B** $110B – $116B

$110B $112B $113B $115B $116B

##### diluted EPS

PricedIn **$1.98** $1.82 – $2.14

$1.82 $1.92 $1.98 $2.06 $2.14

**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 five analysts anchor on the company's guidance and sit very close together. Analysts B, A and C take the midpoint of the sales and margin ranges; Analysts D and E lean towards the top, citing recent beats. Analyst E carries the widest spread of outcomes and Analyst D the narrowest.

The analysts expect fourth-quarter fiscal 2026 sales of about $113B, inside the company's own range, as chip shortages cap a strong iPhone cycle.

Sales **$113B** +10% on Q4 FY25 ($102B)

*50% range* $112B – $115B *80% range* $110B – $116B

Diluted EPS **$1.98** +7% on Q4 FY25 ($1.85)

*50% range* $1.92 – $2.06 *80% range* $1.82 – $2.14

#### Investment and cash generation

Base case

Capital spending **$2.60B**

Free cash flow **$28.9B**

Free cash flow: operating cash flow less capital spending.

- **Cash capital spending of $2.6B buys tooling for new products, facilities such as the Houston server plant, stores and data centers for Siri AI; little of it adds sales this quarter. Operating cash flow of $31.5B less that spending leaves free cash flow of $28.9B, on the basis of operating cash flow less capital spending, not a company measure. Launch-season working capital keeps cash below earnings this quarter. *3 of 5***
  - **Analyst B** I allocate my forecast capex across those disclosed categories, weighting data centers up for Siri AI compute
  - **Analyst E** Repurchases and dividends are financing, not deductions from operating cash flow or free cash flow.
  - **Analyst D** Capital spending is about 10.3 billion dollars in fiscal 2026, rising to 13 billion in 2027 and 14 billion in 2028 for private cloud compute and United States manufacturing.

Apple enters its fiscal fourth quarter, July to September 2026, after record June-quarter sales driven by the iPhone 17 family and lifted by a one-off boost from tariff refunds. Demand is running ahead of supply: the company called its chip shortage a demand forecast problem, with iPhone and Mac selling far better than it had planned.

For this quarter the company guided sales growth between 9% and 11% on a year earlier and gross margin between 47% and 48%, including approximately one percentage point of benefit from tariff refunds. It also warned that supply constraints would increase significantly and that it would pay even higher memory costs.

The analysts build directly on that guidance. Their middle case has sales growth of +10% on a year earlier, gross margin of +48% and operating margin of +30%, giving earnings per share of $1.98, an earnings per share rise of +7.0%.

They differ only on where in the range sales land. Analysts B, A and C take the midpoint; Analysts D and E lean towards the top because recent quarters beat the middle of the company's range. In the low case sales reach $110B; in the high case sales reach $116B.

Earnings per share slip slightly from the June quarter despite higher sales, because the refund benefit shrinks, memory costs rise and research spending on artificial intelligence keeps climbing.

Earnings per share of $1.98 come from net income of $29.1B, after a tax rate of +16%, spread over a diluted share count that buybacks keep shrinking.

#### Sales by quarter

Q2 FY25 $95B +5%

Q3 FY25 $94B +10%

Q4 FY25 $102B +8%

Q1 FY26 $144B +16%

Q2 FY26 $111B +17%

Q3 FY26 $109B +16%

Q4 FY26 $113B +10%

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

#### The quarter forecast, line by line

| Line | Q3 FY26 reported | Q4 FY25 reported | Q4 FY26 forecast | Q1 FY26 reported | Q1 FY27 forecast |
| --- | --- | --- | --- | --- | --- |
| Net sales | $109B | $102B | $113B | $144B | $155B |
| Sales growth, year on year | +16% | +8% | +10% | +16% | +8% |
| Products | $79B | $74B | $82B | $114B | $122B |
| Services | $30.7B | $28.8B | $31.2B | $30.0B | $33.0B |
| Operating segments |  |  |  |  |  |
| Americas | $45.8B | $44.2B | $48.4B | $58.5B | $63.1B |
| Europe | $29.4B | $28.7B | $31.5B | $38.1B | $41.8B |
| Greater China | $18.8B | $14.5B | $16.3B | $25.5B | $26.9B |
| Japan | $6.55B | $6.64B | $7.35B | $9.41B | $9.98B |
| Rest of Asia Pacific | $8.9B | $8.4B | $9.6B | $12.1B | $13.2B |
| Cost of sales |  |  |  |  |  |
| Products | $47.2B | $47.0B | $51.7B | $67.5B | $74.2B |
| Services | $7.49B | $7.11B | $7.70B | $7.05B | $7.92B |
| Cost of sales | $54.6B | $54.1B | $59.4B | $74.5B | $82.2B |
| Gross margin | $54.8B | $48.3B | $53.7B | $69.2B | $72.8B |
| Gross margin | 50.1% | 47.2% | 47.5% | 48.2% | 47.0% |
| Research and development | $11.7B | $8.9B | $11.8B | $10.9B | $12.6B |
| Selling, general and administrative | $7.35B | $7.05B | $7.40B | $7.49B | $7.90B |
| Total operating expenses | $19.1B | $15.9B | $19.2B | $18.4B | $20.5B |
| Operating income | $35.7B | $32.4B | $34.5B | $50.9B | $52.4B |
| Operating margin | 32.6% | 31.6% | 30.5% | 35.4% | 33.8% |
| Other income/(expense), net | $572M | $377M | $350M | $150M | $200M |
| Income before provision for income taxes | $36.3B | $32.8B | $34.8B | $51.0B | $52.5B |
| Provision for income taxes | $6.48B | $5.34B | $5.74B | $8.90B | $8.93B |
| Tax rate | 17.9% | 16.3% | 16.5% | 17.5% | 17.0% |
| Net income | $29.8B | $27.5B | $29.1B | $42.1B | $43.6B |
| Diluted (in shares) | 14.71B | 14.86B | 14.66B | 14.81B | 14.56B |
| Diluted EPS | $2.02 | $1.85 | $1.98 | $2.84 | $3.00 |

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 five 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

**Sales growth outlook**

September-quarter sales to grow between 9% and 11% on a year earlier “As a result, we expect our September quarter total company revenue to grow between 9% and 11% year-over-year.” Apple July 2026 earnings call

**Gross margin outlook**

Gross margin between 47% and 48%, including approximately one percentage point from tariff refunds “We expect gross margin to be between 47% and 48%. This includes an expected benefit of approximately one percentage point related to tariff refunds.” Apple July 2026 earnings call

**Operating expense outlook**

Operating expenses between $19.1 billion and $19.4 billion “We expect operating expenses to be between $19.1 billion and $19.4 billion.” Apple July 2026 earnings call

**Supply constraints**

Supply constraints expected to increase significantly from the June quarter “we expect the impact from supply constraints to increase significantly sequentially.” Apple July 2026 earnings call

**Memory costs**

Even higher memory costs expected in September, only partly offset “For September, we expect to pay even higher memory costs, and we're able to offset partly by a few factors.” Apple July 2026 earnings call

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

Base the middle forecast

Q4-FY2026

Sales **$113B**

Diluted EPS **$1.98**

Capital spending **$2.60B**

Free cash flow **$28.9B**

**FCF walk and spending detail**

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

| Net income | $29.1B |
| --- | --- |
| Depreciation and amortization | $3.40B |
| Share-based compensation | $3.50B |
| Working capital, including receivables, inventory and payables | −$4.46B |
| Operating cash flow | $31.5B |
| Less capital spending | −$2.60B |
| Free cash flow | $28.9B |

**Net income**

$113.1 billion of sales at a 47.5% gross margin and $19.25 billion of operating expense.

**Depreciation and amortization**

June quarter run rate of $3.3 billion plus a modest step up.

**Share-based compensation**

June quarter was $3.4 billion and the trend is rising with headcount and equity grants.

**Working capital, including receivables, inventory and payables**

Seasonal September build in trade receivables and vendor receivables, only partly funded by payables.

##### Capital spending

Split across the company's own named categories. The proportions are my forecast assumption; the company does not publish a capital spending budget by category. Tooling and facilities take nearly all of it because of the advanced-node and private cloud compute build.

| Tooling | $1.15B |
| --- | --- |
| Facilities | $1.20B |
| Data centers | $250M |
| Unallocated capital spending | $0 |
| Total capital spending | $2.60B |

**Tooling** Model estimate: about 44% of the quarter, consistent with the tooling-heavy ramp for advanced nodes.

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

**Facilities** Model estimate: buildings and the Houston server and Mac mini facilities.

“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** Model estimate: private cloud compute capacity.

“in '25, we did have CapEx costs associated with building out our private cloud compute environment in our first-party data centers” “we're committed to invest $600 billion over the next 4 years with a focus on innovation in strategic areas like advanced manufacturing, silicon engineering and artificial intelligence”

#### Three ways the base case happens

These levers explain the outcome together.

1. **Sales land inside the company's range as supply caps shipments.** The guided growth already allows for worse chip shortages across iPhone, Mac and iPad. Supply, not demand, sets the sales figure this quarter: the analysts take the guided growth and place sales between the midpoint and the top, so earnings follow the range closely. Stronger demand would show up mainly as backlog for December rather than extra September sales.
  Watch Apple's report on 2 November 2026: sales against the guided range and any comment on shortages.
  **Analyst reasoning**
  - **Analyst B** I take the middle (~$112.7B, +10%) as my base
  - **Analyst E** September shipments remain constrained
  - **Analyst D** Shortages of advanced chip-making capacity cap iPhone, Mac and iPad shipments in the September quarter and probably into December.
2. **Gross margin holds near the midpoint, with a shrinking tariff refund.** September guidance includes a smaller refund than the June quarter had, while memory costs rise further. A smaller refund and costlier memory pull gross margin down from the June quarter, which is why earnings per share slip slightly from June even as sales rise. Carry-in inventory and cheaper non-memory parts partly offset the memory bill this quarter.
  Watch Gross margin in the 2 November release against the guided range, and the refund amount the company discloses.
  **Analyst reasoning**
  - **Analyst A** September-quarter revenue growth near 10% with gross margin 47.5% including one point of tariff refunds
  - **Analyst C** September-quarter revenue grows about 10% and gross margin is 47.5%, including tariff refunds.
  - **Analyst B** I treat the refund as partly recurring but shrinking in Q4 and largely absent from FY2027
3. **Operating costs keep rising with artificial intelligence research.** Research spending is growing far faster than sales, driven by AI infrastructure and headcount. Operating expenses near the middle of the guided range hold operating margin around +30%, below the June quarter. Research and development is the largest of these costs and the main reason operating margin trails June.
  Watch Operating expenses in the 2 November release against the guided range.
  **Analyst reasoning**
  - **Analyst C** The September-quarter base uses 10% revenue growth, a 47.5% gross margin, $19.25 billion of operating expenses, $350 million of other income and a 16.5% tax rate.
  - **Analyst D** Operating expenses are growing faster than sales, driven by research and development on artificial intelligence.
  - **Analyst A** Research and development is up 32% year over year in the June quarter and 33% over nine months

Sales must reach $113B, with sales growth of +10% on a year earlier, inside the guided range despite worse shortages; gross margin must hold near +48% with a smaller tariff refund; and operating expenses must stay inside the guided range, giving earnings per share of $1.98 and free cash flow of $28.9B.

High about 1 chance in 10 of better

Q4-FY2026

Sales **$116B** +3% vs base

Diluted EPS **$2.14** +8% vs base

Capital spending **$3.80B**

Free cash flow **$32.2B**

**FCF walk and spending detail**

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

| Net income | $31.2B |
| --- | --- |
| Depreciation and amortization | $3.60B |
| Share-based compensation | $3.70B |
| Other operating adjustments | −$400M |
| Net working-capital movement | −$2.14B |
| Operating cash flow | $36.0B |
| Less capital spending | −$3.80B |
| Free cash flow | $32.2B |

**Net income**

High-case diluted EPS of $2.14 applied to 14.6 billion diluted shares.

**Depreciation and amortization**

Higher investment supports slightly higher non-cash expense.

**Share-based compensation**

Forecast non-cash compensation near recent levels.

**Other operating adjustments**

Forecast other operating outflow.

**Net working-capital movement**

Strong sales and collections limit the net working-capital use despite higher production.

##### Capital spending

Higher output and artificial-intelligence demand raise forecast capital spending to $3.8 billion, allocated 40% to tooling, 20% to facilities, 10% to retail and 30% to data centers. The split is mine.

| Tooling | $1.52B |
| --- | --- |
| Facilities | $760M |
| Retail investments | $380M |
| Data centers | $1.14B |
| Unallocated capital spending | $0 |
| Total capital spending | $3.80B |

**Tooling** Analyst allocation for added manufacturing tooling; 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 for facilities; 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 for stores; 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 for greater first-party 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.” “Payments for acquisition of property, plant and equipment (6,799) (9,473)”

#### 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, releasing backlogged iPhone and Mac demand.** The shortage stems from demand beating Apple's own forecasts, not from a supplier failure. More units ship within the quarter, lifting sales above the guided range; higher volume also lets supplier payables fund more of the launch, shrinking the working-capital drag on free cash flow.
  Watch Shorter delivery times for the new iPhones in September and sales above the top of the range on 2 November.
  **Analyst reasoning**
  - **Analyst B** Faster resolution of advanced-node constraints releasing backlogged iPhone and Mac demand
  - **Analyst E** Supply expands to meet demand
  - **Analyst D** faster recovery of advanced-node supply
2. **A larger tariff refund and better mix lift gross margin.** June-quarter refunds were about twice the benefit guided for September; mix has pushed margin above the range before. Margin at or above the top of the range adds to earnings per share without needing more sales. Refunds are one-off, so this lifts the quarter but not the next year.
  Watch The refund amount and gross margin in the 2 November release.
  **Analyst reasoning**
  - **Analyst B** the Q4 tariff-refund benefit comes in above the roughly one point guided
  - **Analyst E** Services and product mix lift gross profit
  - **Analyst C** Product mix, pricing and services leverage offset memory and storage inflation.
3. **Price increases stick with little loss of volume.** Management said it was too early to judge how buyers would react to higher iPad and Mac prices. Higher average prices protect revenue and part of the margin; if volumes hold, both sales and earnings clear the middle case.
  Watch Mac and iPad sales in the 2 November release holding their growth after the price rises.
  **Analyst reasoning**
  - **Analyst D** price increases holding without lost volume
  - **Analyst E** Upgrade demand stays strong despite pricing
  - **Analyst C** Siri AI and new products sustain upgrades without material demand destruction from pricing.

Supply would have to ease faster than feared and launches beat the range, lifting sales to about $116B with gross margin near the top of the guided range or a larger refund, for earnings per share of $2.14 and free cash flow of $32.2B. Analyst E goes furthest, to sales of $118B and earnings per share of $2.23, because it lets sales, mix, memory costs and refunds all surprise favourably at once.

Apple beat the top of its March-quarter range and landed in the upper half of its June-quarter range, so a beat has precedent.

The five highs run from $116B (Analyst C) to $118B (Analyst E).

First sign The first sign is the 2 November 2026 report: sales above the top of the guided range with gross margin at or above its top.

Low about 1 chance in 10 of worse

Q4-FY2026

Sales **$110B** −3% vs base

Diluted EPS **$1.82** −8% vs base

Capital spending **$2.80B**

Free cash flow **$24.7B**

**FCF walk and spending detail**

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

| Net income | $26.6B |
| --- | --- |
| Depreciation and amortization | $3.40B |
| Share-based compensation | $3.50B |
| Other operating adjustments | −$600M |
| Net working-capital movement | −$5.37B |
| Operating cash flow | $27.5B |
| Less capital spending | −$2.80B |
| Free cash flow | $24.7B |

**Net income**

Low-case diluted EPS of $1.82 applied to 14.6 billion diluted shares.

**Depreciation and amortization**

Forecast non-cash expense follows recent quarterly experience.

**Share-based compensation**

Forecast non-cash compensation remains near recent quarterly levels.

**Other operating adjustments**

Forecast other operating outflow in a weaker earnings case.

**Net working-capital movement**

Inventory and supplier-related uses outweigh collections in the low case.

##### Capital spending

The $2.8 billion forecast is allocated 40% to tooling, 20% to facilities, 10% to retail and 30% to data centers. These are analyst estimates, not a disclosed company split.

| Tooling | $1.12B |
| --- | --- |
| Facilities | $560M |
| Retail investments | $280M |
| Data centers | $840M |
| Unallocated capital spending | $0 |
| Total capital spending | $2.80B |

**Tooling** Analyst allocation for product manufacturing tooling; 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 for corporate and manufacturing facilities; 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 for stores; 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 for first-party data-center 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.” “Payments for acquisition of property, plant and equipment (6,799) (9,473)”

#### Three ways the low case happens

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

1. **Chip shortages deepen beyond what the guidance allows.** The company already expects supply constraints to increase significantly; its latest quarterly report says these trends may intensify. Fewer iPhones, Macs and iPads ship, pushing sales towards the bottom of the range or below it. Lower volume also means smaller supplier payables, so working capital drags harder on free cash flow.
  Watch Lengthening delivery times for new iPhones during September, or sales near the floor in the 2 November release.
  **Analyst reasoning**
  - **Analyst E** Advanced-chip supply recovers slowly
  - **Analyst C** Supply constraints limit iPhone, Mac and iPad availability.
  - **Analyst B** Prolonged advanced-node supply constraints capping iPhone and Mac shipments
2. **Memory costs outrun the offsets.** Management called memory pricing a hundred-year flood and expects even higher September costs, with carry-in inventory protection fading. Gross margin falls below the guided range, cutting earnings per share more than sales. Analyst A's low case pairs weak sales with a margin well below the floor, the main reason its earnings low is the deepest.
  Watch Gross margin below the guided floor in the 2 November release.
  **Analyst reasoning**
  - **Analyst D** memory costs rising faster than price increases and carry-in inventory can offset
  - **Analyst E** Memory costs exceed pricing offsets
  - **Analyst A** Memory (DRAM/NAND) and advanced-node costs keep climbing instead of peaking, pushing product gross margin toward the mid-30s
3. **Price increases and a squeezed consumer dent demand.** Apple raised iPad and Mac prices, oil prices have jumped and consumer sentiment sits near record lows. Softer sell-through on iPad and Mac lowers sales and leaves receivables and inventory building relative to sales, the larger working-capital drag behind the low-case free cash flow of $24.7B.
  Watch Retailer and carrier comments on iPad and Mac demand after the price rises, and October consumer sentiment.
  **Analyst reasoning**
  - **Analyst D** weaker consumer demand after price increases
  - **Analyst C** Higher prices and weaker consumer confidence reduce hardware demand.
  - **Analyst D** the low case has demand softening

Sales would have to come in near the bottom of the range or below it, at about $110B, with gross margin under the guided floor as memory costs and shortages bite, taking earnings per share to $1.82 and free cash flow to $24.7B. Analyst E goes furthest on sales, to $109B, because it lets sales, product mix, memory costs and refunds disappoint together. Analyst A goes furthest on earnings per share, to $1.80, because its low case pairs weak sales with a gross margin well below the guided floor.

The company has beaten the middle of its range in recent quarters, so a miss would break a pattern; but it has warned that shortages and memory costs will intensify.

The five lows run from $109B (Analyst E) to $110B (Analyst D).

First sign The first sign is the 2 November 2026 report: sales near or below the bottom of the guided range, or gross margin below its floor.

#### Surfaced outlier views

For Q4-FY2026 the five analysts sit within 0.4% of the PricedIn number on sales and within 1.5% on diluted EPS. The furthest, and why:

- **Analyst D** · Q4-FY2026: sales **$114B**, the highest of the five (PricedIn $113B) and diluted EPS **$2.01**, the highest of the five (PricedIn $1.98)
  Why Analyst D puts sales near the top of the company's range because the March and June quarters both came in above the midpoint, and sets gross margin a little above the middle. Analyst D's operating margin of +31% compares with an average operating margin of +30%, so Analyst D's net income reaches $29.4B, against Analyst A's net income of $29.1B.
  “Recent quarters have come in above the midpoint of the company's range (March above the top, June in the upper part), so I put the middle near the top, at about 113.5 billion (up about 11%).”

#### Watch

Apple reports this quarter on 2 November 2026. Sales above the guided range with gross margin at its top point higher; sales near the floor, gross margin under the range or a cautious December outlook point lower.

##### Sales

PricedIn **$155B** $145B – $163B

$145B $150B $155B $160B $163B

##### diluted EPS

PricedIn **$3.00** $2.50 – $3.28

$2.50 $2.76 $3.00 $3.12 $3.28

**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 on holiday sales within a narrow band but disagree on margin. Analysts D, B and C see earnings per share near $3.00; Analysts E and A assume a lower gross margin and higher expenses, and Analyst A also trims sales for the oil shock.

The analysts expect first-quarter fiscal 2027 sales of about $155B, a holiday record held back by chip shortages and dearer memory.

Sales **$155B** +8% on Q1 FY26 ($144B)

*50% range* $150B – $160B *80% range* $145B – $163B

Diluted EPS **$3.00** +6% on Q1 FY26 ($2.84)

*50% range* $2.76 – $3.12 *80% range* $2.50 – $3.28

#### Investment and cash generation

Base case

Capital spending **$3.00B**

Free cash flow **$51.0B**

Free cash flow: operating cash flow less capital spending.

- **Cash capital spending of $3.0B continues the data center build for Siri AI, launch tooling and American facilities; it supports later quarters more than this one. Operating cash flow of $54.0B less that spending gives free cash flow of $51.0B, defined as operating cash flow less capital spending, not a company measure. Record holiday earnings drive the cash; the timing of holiday collections against launch payables decides how much of it arrives this quarter. *3 of 5***
  - **Analyst C** Capital spending is allocated across the company's disclosed tooling, facilities, retail and data-center categories, with a hybrid first- and third-party approach and gradual growth after the private-cloud buildout.
  - **Analyst B** I allocate my forecast capex across those disclosed categories, weighting data centers up for Siri AI compute
  - **Analyst E** I allocate only estimated tooling and data-center spending; facilities and retail remain unallocated.

The December quarter is always Apple's largest because of holiday demand. Last year's was exceptional, with the iPhone 17 cycle at its peak and Greater China surging, which makes this year's comparison tough.

The company gives no outlook for this quarter until its 2 November report. In July it declined to say anything beyond September, while warning that market memory prices keep rising and that carry-in inventory will help less after September.

The analysts' middle case has sales growth of +7.8% on a year earlier and earnings per share growth of +5.6%, slower than sales because gross margin falls below last year's level.

They agree on sales but split on margin. Analysts D, B and C keep earnings per share near $3.00; Analysts E and A assume a more cautious margin and higher expenses, and Analyst A also trims holiday sales for the oil price shock.

The range is wide: in the low case earnings per share fall to $2.50; in the high case earnings per share reach $3.28, depending mostly on how fast supply recovers and how hard memory costs bite.

Earnings per share of $3.00 reflect holiday volume against a gross margin below last year's, research spending still rising and a share count that buybacks cut each quarter.

#### The quarter forecast, line by line

| Line | Q3 FY26 reported | Q4 FY25 reported | Q4 FY26 forecast | Q1 FY26 reported | Q1 FY27 forecast |
| --- | --- | --- | --- | --- | --- |
| Net sales | $109B | $102B | $113B | $144B | $155B |
| Sales growth, year on year | +16% | +8% | +10% | +16% | +8% |
| Products | $79B | $74B | $82B | $114B | $122B |
| Services | $30.7B | $28.8B | $31.2B | $30.0B | $33.0B |
| Operating segments |  |  |  |  |  |
| Americas | $45.8B | $44.2B | $48.4B | $58.5B | $63.1B |
| Europe | $29.4B | $28.7B | $31.5B | $38.1B | $41.8B |
| Greater China | $18.8B | $14.5B | $16.3B | $25.5B | $26.9B |
| Japan | $6.55B | $6.64B | $7.35B | $9.41B | $9.98B |
| Rest of Asia Pacific | $8.9B | $8.4B | $9.6B | $12.1B | $13.2B |
| Cost of sales |  |  |  |  |  |
| Products | $47.2B | $47.0B | $51.7B | $67.5B | $74.2B |
| Services | $7.49B | $7.11B | $7.70B | $7.05B | $7.92B |
| Cost of sales | $54.6B | $54.1B | $59.4B | $74.5B | $82.2B |
| Gross margin | $54.8B | $48.3B | $53.7B | $69.2B | $72.8B |
| Gross margin | 50.1% | 47.2% | 47.5% | 48.2% | 47.0% |
| Research and development | $11.7B | $8.9B | $11.8B | $10.9B | $12.6B |
| Selling, general and administrative | $7.35B | $7.05B | $7.40B | $7.49B | $7.90B |
| Total operating expenses | $19.1B | $15.9B | $19.2B | $18.4B | $20.5B |
| Operating income | $35.7B | $32.4B | $34.5B | $50.9B | $52.4B |
| Operating margin | 32.6% | 31.6% | 30.5% | 35.4% | 33.8% |
| Other income/(expense), net | $572M | $377M | $350M | $150M | $200M |
| Income before provision for income taxes | $36.3B | $32.8B | $34.8B | $51.0B | $52.5B |
| Provision for income taxes | $6.48B | $5.34B | $5.74B | $8.90B | $8.93B |
| Tax rate | 17.9% | 16.3% | 16.5% | 17.5% | 17.0% |
| Net income | $29.8B | $27.5B | $29.1B | $42.1B | $43.6B |
| Diluted (in shares) | 14.71B | 14.86B | 14.66B | 14.81B | 14.56B |
| Diluted EPS | $2.02 | $1.85 | $1.98 | $2.84 | $3.00 |

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 five 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, owing to holiday demand “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 2024 annual report

**Memory beyond September**

Market memory prices seen rising beyond September, with a growing impact “beyond september we see the market pricing for memory continuing to increase which could drive an increasing impact on our business” Apple July 2026 earnings call

**No December outlook yet**

Management gave no guidance beyond the September quarter “Beyond September, we're not providing any color.” Apple July 2026 earnings call

**Advanced-node constraint**

Shortages come from limited advanced chip-making capacity for Apple's own processors “The constraints that we have are driven by the availability of the advanced nodes that our SoCs are produced on.” Apple January 2026 earnings call

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

Base the middle forecast

Q1-FY2027

Sales **$155B**

Diluted EPS **$3.00**

Capital spending **$3.00B**

Free cash flow **$51.0B**

**FCF walk and spending detail**

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

| Net income | $43.6B |
| --- | --- |
| Depreciation and amortization | $3.60B |
| Share-based compensation expense | $3.80B |
| Changes in operating assets and liabilities | $3.00B |
| Operating cash flow | $54.0B |
| Less capital spending | −$3.00B |
| Free cash flow | $51.0B |

**Net income**

Quarter plan net income, earnings per share about 3.00.

**Depreciation and amortization**

Slightly above recent quarters.

**Share-based compensation expense**

Seasonally higher in the December quarter.

**Changes in operating assets and liabilities**

December quarters typically collect September receivables; last December's working capital and other items added about 5 billion.

##### Capital spending

December-quarter spending near last year's 2.4 billion plus data center growth; no category amounts are disclosed, so the whole amount is left unallocated.

| Unallocated capital spending | $3.00B |
| --- | --- |
| Total capital spending | $3.00B |

“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. **Holiday demand stays strong but supply still limits shipments.** Shortages have lasted since January and the company has not said when they clear. Sales grow, but more slowly than in last year's exceptional quarter, as constrained iPhone and Mac supply caps the holiday peak. Analyst D holds growth to high single digits; Analyst A trims further for the oil shock.
  Watch The December-quarter outlook on 2 November 2026, and new-iPhone delivery times through November.
  **Analyst reasoning**
  - **Analyst D** December-quarter growth is held to about 8% against a tough comparison of about 16% growth a year earlier.
  - **Analyst E** I forecast $155 billion for December, rather than extrapolating the June quarter sequentially.
  - **Analyst C** I keep supply constraints meaningful in the near term
2. **Gross margin falls from last year as memory costs bite.** Carry-in inventory helps less after September while memory prices keep climbing; tariff refunds are assumed not to recur. A lower margin on higher sales means earnings per share grow more slowly than sales. The spread between analysts on this margin is the main reason their earnings forecasts differ more than their sales forecasts.
  Watch The December-quarter gross margin guidance on 2 November 2026.
  **Analyst reasoning**
  - **Analyst C** The final revision lowers December-quarter gross margin to 46.8% and fiscal 2027 gross margin to 47%
  - **Analyst E** For December, continued supply pressure and shrinking inventory-cost protection support keeping my more cautious margin, even at the same sales forecast.
  - **Analyst D** I assume none in fiscal 2027.
3. **Services keep growing while buybacks cut the share count.** Over two and a half billion active devices feed services, and a new repurchase authorisation is in place. Steady, high-margin services revenue cushions the hardware margin squeeze, and a smaller share count adds to earnings per share growth this quarter.
  Watch Services growth in the 2 November release and any services comment for December.
  **Analyst reasoning**
  - **Analyst B** Services growing about 11% on a 2.5-billion-device installed base
  - **Analyst E** Repurchases gradually lower weighted-average shares
  - **Analyst C** Share repurchases reduce the diluted share count and support EPS growth.

Sales must reach $155B, with sales growth of +7.8% on a year earlier, despite shortages and a tough comparison; gross margin must fall only moderately from last year as memory costs rise and refunds end; and earnings per share must reach $3.00, with free cash flow of $51.0B.

High about 1 chance in 10 of better

Q1-FY2027

Sales **$163B** +5% vs base

Diluted EPS **$3.28** +9% vs base

Capital spending **$3.30B**

Free cash flow **$52.9B**

**FCF walk and spending detail**

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

| Net income (forecast) | $47.6B |
| --- | --- |
| Depreciation, amortization and share-based compensation, net of other non-cash items | $7.60B |
| Working capital and other operating movements, net | $1.00B |
| Operating cash flow | $56.2B |
| Less capital spending | −$3.30B |
| Free cash flow | $52.9B |

**Net income (forecast)**

High-case Q1-FY2027 net income consistent with EPS near $3.28.

**Depreciation, amortization and share-based compensation, net of other non-cash items**

Slightly above base.

**Working capital and other operating movements, net**

A supplier-payables build on record holiday volumes, as in the December 2025 quarter, which showed roughly a $4.5B working-capital inflow; I assume only a small inflow given the mixed history.

##### Capital spending

High earnings come with modestly higher capex; allocation is my estimate.

| data centers | $1.38B |
| --- | --- |
| tooling | $790M |
| facilities | $680M |
| retail investments | $280M |
| Unallocated capital spending | $170M |
| Total capital spending | $3.30B |

**data centers** My estimate; heavy Siri AI adoption.

“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.

“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.

“our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.” “We're excited for the upcoming opening of the Apple Advanced Manufacturing Center in Houston.”

**retail investments** 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.” “Operating cash flow was very strong at $34.4 billion.”

#### 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 backlogged demand ships in the holidays.** Management called the shortage a demand-forecast problem, with iPhone and Mac far ahead of plan. Pent-up orders convert into holiday sales, lifting revenue well above the middle case; strong collections and supplier payables turn working capital into a source of cash.
  Watch A December-quarter outlook on 2 November 2026 that says shortages are easing.
  **Analyst reasoning**
  - **Analyst B** Faster resolution of advanced-node constraints releasing backlogged iPhone and Mac demand
  - **Analyst C** Supply improves enough to satisfy strong iPhone and Mac demand.
  - **Analyst D** faster recovery of advanced-node supply
2. **Siri AI drives a holiday upgrade wave.** The rebuilt Siri ships this fall, though not at first in Europe or China. More upgrades lift iPhone sales and paid cloud storage in the quarter, adding to both sales and earnings.
  Watch Management comments on Siri AI adoption and upgrade rates on the 2 November call.
  **Analyst reasoning**
  - **Analyst B** Siri AI driving a holiday upgrade wave
  - **Analyst D** Siri AI spurring iPhone upgrades and paid cloud storage
  - **Analyst C** Siri AI and new products sustain upgrades without material demand destruction from pricing.
3. **Memory costs peak early and pricing offsets them.** Analysts B and A expect memory prices to roll over as new supply arrives. Gross margin holds closer to last year's, so earnings per share grow faster than sales; Analyst C's high case rests on mix and pricing offsetting component inflation.
  Watch December-quarter gross margin guidance near last year's level on 2 November 2026.
  **Analyst reasoning**
  - **Analyst B** Memory costs peaking earlier than the market expects
  - **Analyst C** Product mix, pricing and services leverage offset memory and storage inflation.
  - **Analyst A** Memory contract prices roll over in calendar 2027, restoring product gross margin toward 38%

Supply would have to recover by the holidays, Siri AI spur an upgrade wave and memory costs peak early, lifting sales to about $163B and earnings per share to $3.28, with free cash flow of $52.9B. Analyst C goes furthest on earnings per share, to $3.50, because it lets pricing and mix offset component inflation while supply catches up. Analyst E sees sales up to $169B.

Last year's holiday quarter beat its guidance by a wide margin, and Analyst B notes that Apple has been beating the top of its ranges in this cycle.

The five highs run from $161B (Analyst A) to $169B (Analyst E).

First sign The first sign is the 2 November 2026 outlook: double-digit December growth with gross margin guided near last year's.

Low about 1 chance in 10 of worse

Q1-FY2027

Sales **$145B** −6% vs base

Diluted EPS **$2.50** −17% vs base

Capital spending **$3.00B**

Free cash flow **$39.0B**

**FCF walk and spending detail**

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

| Net income | $36.1B |
| --- | --- |
| Depreciation and amortization | $3.60B |
| Share-based compensation | $3.70B |
| Working capital, including receivables and payables | −$1.36B |
| Operating cash flow | $42.0B |
| Less capital spending | −$3.00B |
| Free cash flow | $39.0B |

**Net income**

Low case: $145.5 billion of sales at a 44.5% gross margin and $21.6 billion of operating expense.

**Depreciation and amortization**

Near the September quarter run rate.

**Share-based compensation**

Near the September quarter run rate.

**Working capital, including receivables and payables**

Holiday receivables build only partly funded by payables in a weak demand case.

##### Capital spending

Category split is my assumption across the company's own named capital spending lines.

| Tooling | $1.35B |
| --- | --- |
| Facilities | $1.35B |
| Data centers | $300M |
| Unallocated capital spending | $0 |
| Total capital spending | $3.00B |

**Tooling** Model 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** Model estimate.

“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** Model estimate.

“in '25, we did have CapEx costs associated with building out our private cloud compute environment in our first-party data centers” “we do believe this hybrid model has served us very well, and we continue to want to leverage it”

#### Three ways the low case happens

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

1. **Shortages last through the holiday quarter.** Analyst D does not assume the chip-capacity shortage clears before December. Fewer holiday shipments cut sales below the middle case; with lower volume, collections fall while launch payables are still settled, so free cash flow drops further than earnings.
  Watch A December-quarter outlook on 2 November 2026 that cites continuing shortages.
  **Analyst reasoning**
  - **Analyst D** supply constraints on advanced chip nodes lasting through the holiday quarter
  - **Analyst E** Advanced-chip supply recovers slowly
  - **Analyst B** Prolonged advanced-node supply constraints capping iPhone and Mac shipments
2. **Memory costs climb faster than prices and mix can offset.** Management said memory prices keep rising beyond September as inventory protection fades. Gross margin drops well below last year's, so earnings per share fall even if sales hold up; Analyst A's low case pairs weak sales with a sharply lower margin.
  Watch December-quarter gross margin guidance well below last year's level on 2 November 2026.
  **Analyst reasoning**
  - **Analyst A** Memory (DRAM/NAND) and advanced-node costs keep climbing instead of peaking, pushing product gross margin toward the mid-30s
  - **Analyst D** memory costs rising faster than price increases and carry-in inventory can offset
  - **Analyst B** Memory cost inflation squeezing product gross margin toward 36% through FY2027
3. **A squeezed consumer and higher prices cut holiday demand.** Oil prices nearly doubled from July to October and consumer sentiment sits near record lows. Weaker sell-through cuts sales and leaves inventory and receivables built up, adding a working-capital drag to free cash flow at the low end.
  Watch Holiday sales readings from carriers and retailers in late November and December.
  **Analyst reasoning**
  - **Analyst A** I weight the low path toward a weak consumer.
  - **Analyst B** Stagflationary macro finally denting consumer electronics demand
  - **Analyst C** Higher prices and weaker consumer confidence reduce hardware demand.

Shortages would have to last through the holidays while memory costs outrun price rises and a squeezed consumer buys less, holding sales to about $145B and earnings per share to $2.50, with free cash flow of $39.0B. Analyst E goes furthest, to sales of $142B and earnings per share of $2.42, because it combines slow supply recovery, memory costs above pricing offsets and softer services profit, with launch payables settling against weaker collections.

A year ago Apple beat its December guidance by a wide margin. This year it starts with shortages it says will worsen and memory costs it says will keep rising.

The five lows run from $142B (Analyst E) to $148B (Analyst B).

First sign The first sign is the December-quarter outlook in the 2 November 2026 report: weak growth, or a gross margin guide well below last year's.

#### Surfaced outlier views

For Q1-FY2027 the five analysts sit within 1.2% of the PricedIn number on sales and within 6.7% on diluted EPS. The furthest, and why:

- **Analyst A** · Q1-FY2027: sales **$153B**, the lowest of the five (PricedIn $155B) and diluted EPS **$2.80**, the lowest of the five (PricedIn $3.00)
  Why Analyst A holds December growth down for the oil price shock, which squeezes household budgets just as the quarter begins. It also carries the heaviest costs: Analyst A's research spending of $13.2B compares with Analyst D's research spending of $12.6B, and Analyst A's operating income of $49.0B compares with Analyst D's operating income of $52.4B.
  “Brent crude nearly doubled from about $69 in early July to about $127 in mid-October 2026, right as the December quarter begins.”

#### Watch

The 2 November 2026 report gives the December-quarter outlook. Double-digit growth guidance with gross margin near last year's points higher; single-digit growth, continuing shortages or a margin guide well below last year's point lower.

##### Sales

PricedIn **$477B** $474B – $481B

$474B $476B $477B $479B $481B

##### diluted EPS

PricedIn **$8.86** $8.70 – $9.02

$8.70 $8.80 $8.86 $8.94 $9.02

**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.

With nine months reported, the analysts agree almost exactly. Analysts D and E are a touch higher because they put September near the top of the guided range; Analysts B, A and C take the midpoint.

The analysts expect fiscal 2026 sales of about $477B, a strong year already three quarters reported, with only September left to forecast.

Sales **$477B** +15% on FY2025

*50% range* $476B – $479B *80% range* $474B – $481B

Diluted EPS **$8.86** $6.87 reported so far

*50% range* $8.80 – $8.94 *80% range* $8.70 – $9.02

Base case

Gross margin **48.7%** 46.9% in FY2025

Operating margin **32.9%** 32.0% in FY2025

#### Investment and cash generation

Base case

Capital spending **$9.40B**

Free cash flow **$139B**

Free cash flow: operating cash flow less capital spending.

- **Cash capital spending of $9.4B for the year, most already spent, went on tooling, facilities including the Houston server plant, stores and private cloud data centers. Operating cash flow of $148B less that spending gives free cash flow of $139B, defined as operating cash flow less capital spending, not a company measure. Record earnings drive it; the final repatriation tax payment and September launch working capital hold it back. *3 of 5***
  - **Analyst E** During the first nine months of 2026, the Company paid the remaining $8.8 billion balance of the deemed repatriation tax payable imposed by the U.S. Tax Cuts and Jobs Act of 2017.
  - **Analyst C** Fiscal 2026 cash forecasts add the September quarter to reported nine-month results.
  - **Analyst D** Capital spending is about 10.3 billion dollars in fiscal 2026

Fiscal 2026 runs to late September and three quarters are reported: sales of $364B and earnings per share of $6.87 so far. The iPhone 17 family drove the strongest cycle in Apple's history, Mac and Greater China surged, and services kept growing.

Margins rose through the year, helped by product mix and, from the June quarter, tariff refunds, even as memory costs climbed. Research spending on artificial intelligence grew much faster than sales.

Adding the September quarter, the analysts' middle case gives sales growth of +15% on fiscal 2025, gross margin of +49%, operating margin of +33% and earnings per share of $8.86.

Because nine months are known, the analysts' spread is tiny. In the low case sales reach $474B; in the high case sales reach $481B, a range set entirely by the September quarter.

Free cash flow rises strongly with record earnings, even after Apple paid the last of the tax on overseas earnings imposed by the 2017 tax law.

Earnings per share of $8.86 add the September quarter's forecast to earnings per share of $6.87 already reported for nine months; tariff refunds lift the year and buybacks shrank the share count.

#### Sales by quarter

Q2 FY25 $95B +5% · margin 47.1%

Q3 FY25 $94B +10% · margin 46.5%

Q4 FY25 $102B +8% · margin 47.2%

Q1 FY26 $144B +16% · margin 48.2%

Q2 FY26 $111B +17% · margin 49.3%

Q3 FY26 $109B +16% · margin 50.1%

Q4 FY26 $113B +10%

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

#### The year forecast, line by line

| Line | FY2025 reported | Nine months FY2026 reported | Q4 FY26 forecast | FY2026 forecast |
| --- | --- | --- | --- | --- |
| Net sales | $416B | $364B | $113B | $477B |
| Sales growth, year on year | +6% | +16% | +10% | +15% |
| Products | $307B | $273B | $82B | $355B |
| Services | $109B | $92B | $31B | $123B |
| Operating segments |  |  |  |  |
| Americas | $178B | $149B | $48B | $198B |
| Europe | $111B | $96B | $32B | $127B |
| Greater China | $64.4B | $64.8B | $16.3B | $81.1B |
| Japan | $28.7B | $24.4B | $7.3B | $31.7B |
| Rest of Asia Pacific | $33.7B | $30.2B | $9.6B | $39.7B |
| Cost of sales |  |  |  |  |
| Products | $194B | $164B | $52B | $216B |
| Services | $26.8B | $21.8B | $7.7B | $29.5B |
| Cost of sales | $221B | $186B | $59B | $245B |
| Gross margin | $195B | $179B | $54B | $232B |
| Gross margin | 46.9% | 49.1% | 47.5% | 48.7% |
| Research and development | $34.5B | $34.0B | $11.8B | $45.9B |
| Selling, general and administrative | $27.6B | $22.3B | $7.4B | $29.7B |
| Total operating expenses | $62.2B | $56.4B | $19.2B | $75.6B |
| Operating income | $133B | $122B | $34B | $157B |
| Operating margin | 32.0% | 33.6% | 30.5% | 32.9% |
| Other income/(expense), net | −$0.32B | $0.67B | $0.35B | $1.02B |
| Income before provision for income taxes | $133B | $123B | $35B | $158B |
| Provision for income taxes | $20.7B | $21.6B | $5.7B | $27.4B |
| Tax rate | 15.6% | 17.6% | 16.5% | 17.3% |
| Net income | $112B | $101B | $29B | $131B |
| Diluted (in shares) | 15.00B | — | 14.66B | — |
| Diluted EPS | $7.46 | $6.87 | $1.98 | $8.86 |

The lines as the company's statement shows them. The current year adds its reported months and its planned quarters line by line, without their shares. Its earnings per share is the forecast's own for the year, the number this tab shows: a company works out a year on the year's shares, so the quarters' figures need not add to it. 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

**Record iPhone quarter**

June-quarter iPhone revenue grew strongly, driven by the iPhone 17 family “iPhone revenue was 54.3 billion dollars up 22 percent year over year driven by the iPhone 17 family.” Apple July 2026 earnings call

**Tariff refunds**

Refunds received are booked as lower product cost of sales “The Company has applied for a refund of tariffs paid, following the processes established by U.S. Customs and Border Protection, and has recognized any refunds received as a reduction of products cost of sales.” Apple June-quarter report

**Repatriation tax paid**

The remaining balance of the 2017 repatriation tax was paid in the first nine months “During the first nine months of 2026, the Company paid the remaining $8.8 billion balance of the deemed repatriation tax payable imposed by the U.S. Tax Cuts and Jobs Act of 2017.” Apple June-quarter report

**Research spending rising**

Research costs rose on AI infrastructure and headcount “Research and development (“R&D”) expense increased during the third quarter and first nine months of 2026 compared to the same periods in 2025 primarily due to higher infrastructure-related costs, including investments in artificial intelligence, and headcount-related expenses.” Apple June-quarter report

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

Base the middle forecast

FY2026

Sales **$477B**

Diluted EPS **$8.86**

Capital spending **$9.40B**

Free cash flow **$139B**

**FCF walk and spending detail**

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

| Net income | $131B |
| --- | --- |
| Depreciation and amortization | $13.4B |
| Share-based compensation | $14.0B |
| Working capital and other operating movements, including the deemed repatriation tax payment | −$9.42B |
| Operating cash flow | $148B |
| Less capital spending | −$9.40B |
| Free cash flow | $139B |

**Net income**

Nine months reported $101,464 million plus $29,058 million forecast for the September quarter.

**Depreciation and amortization**

$9,973 million reported for nine months plus about $3.4 billion for the quarter.

**Share-based compensation**

$10,523 million reported for nine months plus about $3.5 billion for the quarter.

**Working capital and other operating movements, including the deemed repatriation tax payment**

About $2.9 billion of nine-month working capital outflow reported, plus the September receivables build.

##### Capital spending

$6,799 million of capital spending is already reported for nine months, so the year is largely locked in; the fourth-quarter estimate of $2.6 billion is my assumption and the category split is mine, not a company budget.

| Tooling | $4.20B |
| --- | --- |
| Facilities | $4.50B |
| Data centers | $700M |
| Unallocated capital spending | $0 |
| Total capital spending | $9.40B |

**Tooling** Model estimate: about 45% of the year.

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

**Facilities** Model estimate: the Houston AI server and Mac mini facilities and the advanced manufacturing centre.

“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** Model estimate: private cloud compute build-out.

“in '25, we did have CapEx costs associated with building out our private cloud compute environment in our first-party data centers” “we're committed to invest $600 billion over the next 4 years with a focus on innovation in strategic areas like advanced manufacturing, silicon engineering and artificial intelligence”

#### Three ways the base case happens

These levers explain the outcome together.

1. **The September quarter lands inside the guided range.** Nine months are reported; only the September quarter, guided in July, remains. Each analyst's full-year figure is the reported nine months plus its September forecast, so the year's sales and earnings move one-for-one with that quarter.
  Watch The 2 November 2026 report of September-quarter sales against the range.
  **Analyst reasoning**
  - **Analyst B** Apple's own September-quarter guidance is the anchor of my Q4-FY2026 and FY2026 forecast
  - **Analyst C** Fiscal 2026 cash forecasts add the September quarter to reported nine-month results.
  - **Analyst E** Its outlook is my principal September anchor
2. **Tariff refunds and mix keep full-year gross margin high.** Refunds lifted June-quarter margin and are guided to add again in September; mix favoured higher-priced Pro models. Refunds are recorded as lower product costs, so they lift the year's gross margin and earnings per share; the analysts expect little or none in fiscal 2027, which flatters this year's base.
  Watch The refund benefit the company discloses on 2 November 2026.
  **Analyst reasoning**
  - **Analyst D** Taking them out lowers the fiscal 2026 base, so underlying growth into 2027 is higher than reported growth
  - **Analyst A** Refunds are a one-time lift to reported gross margin, not a recurring benefit.
  - **Analyst E** I assume about one point of refund benefit in September and no recurring refund benefit thereafter.
3. **Buybacks keep shrinking the share count.** The board added a new repurchase authorisation in April and dropped the net-cash-neutral target. Fewer diluted shares lift earnings per share faster than net income; buybacks are financing, so they do not reduce operating cash flow or free cash flow.
  Watch Repurchase totals in the 2 November 2026 release.
  **Analyst reasoning**
  - **Analyst E** Repurchases and dividends are financing, not deductions from operating cash flow or free cash flow.
  - **Analyst B** Dropping the net-cash-neutral target signals continued heavy returns.
  - **Analyst D** buybacks cutting share count about 2% a year

The September quarter must land between the middle and the top of the guided range, with gross margin near the guided midpoint, taking full-year sales to $477B and earnings per share to $8.86, with free cash flow of $139B.

High about 1 chance in 10 of better

FY2026

Sales **$481B** +1% vs base

Diluted EPS **$9.02** +2% vs base

Capital spending **$10.6B**

Free cash flow **$142B**

**FCF walk and spending detail**

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

| Net income | $133B |
| --- | --- |
| Depreciation and amortization | $13.6B |
| Share-based compensation | $14.2B |
| Other operating adjustments | −$2.44B |
| Net working-capital movement | −$5.07B |
| Operating cash flow | $153B |
| Less capital spending | −$10.6B |
| Free cash flow | $142B |

**Net income**

Reported nine-month net income plus high-case September-quarter earnings.

**Depreciation and amortization**

Reported nine-month amount plus the high-case quarterly forecast.

**Share-based compensation**

Reported nine-month amount plus the high-case quarterly forecast.

**Other operating adjustments**

Reported nine-month other outflow plus the quarterly forecast.

**Net working-capital movement**

Reported nine-month movement plus the high-case September-quarter use.

##### Capital spending

Reported nine-month capital spending plus $3.8 billion in the high-case fourth quarter gives $10.599 billion. The 40/20/10/30 category split is my estimate.

| Tooling | $4.24B |
| --- | --- |
| Facilities | $2.12B |
| Retail investments | $1.06B |
| Data centers | $3.18B |
| Unallocated capital spending | $0 |
| Total capital spending | $10.6B |

**Tooling** Analyst full-year 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 full-year 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 full-year 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 full-year 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 (6,799) (9,473)”

#### Three ways the high case happens

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

1. **Supply eases in September, releasing backlog.** Shortages reflect demand running ahead of Apple's forecasts rather than a supplier failure. More September shipments add directly to full-year sales and earnings; stronger volume lets supplier payables fund more of the launch, lifting free cash flow.
  Watch September sales above the guided range on 2 November 2026.
  **Analyst reasoning**
  - **Analyst B** Faster resolution of advanced-node constraints releasing backlogged iPhone and Mac demand
  - **Analyst E** Supply expands to meet demand
  - **Analyst D** faster recovery of advanced-node supply
2. **A larger refund and better mix lift September margin.** June-quarter refunds were larger than the benefit guided for September. A higher September margin lifts full-year earnings per share without extra sales; the gain does not carry into fiscal 2027.
  Watch The refund benefit and gross margin reported on 2 November 2026.
  **Analyst reasoning**
  - **Analyst B** the Q4 tariff-refund benefit comes in above the roughly one point guided
  - **Analyst E** Services and product mix lift gross profit
  - **Analyst C** Product mix, pricing and services leverage offset memory and storage inflation.
3. **Price increases stick without lost volume.** Demand for iPhone and Mac has run well ahead of plan. Higher prices with steady volumes lift September sales and protect margin, adding to the year's earnings.
  Watch Mac and iPad growth holding up in the 2 November 2026 release.
  **Analyst reasoning**
  - **Analyst D** price increases holding without lost volume
  - **Analyst E** Upgrade demand stays strong despite pricing
  - **Analyst D** The high case has price increases holding with little loss of volume

September would have to beat the top of the range with gross margin at or above its top, lifting the year to sales of $481B, earnings per share of $9.02 and free cash flow of $142B. Analyst E goes furthest, to sales of $482B and earnings per share of $9.11, because it lets September sales, mix and refunds all surprise favourably together.

Apple beat its March-quarter range and landed in the upper half of its June-quarter range, so a September beat has precedent.

The five highs run from $480B (Analyst C) to $482B (Analyst E).

First sign The first sign is the 2 November 2026 report: September sales above the guided range with gross margin at its top.

Low about 1 chance in 10 of worse

FY2026

Sales **$474B** −1% vs base

Diluted EPS **$8.70** −2% vs base

Capital spending **$9.80B**

Free cash flow **$135B**

**FCF walk and spending detail**

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

| Net income | $128B |
| --- | --- |
| Depreciation and amortization | $13.4B |
| Share-based compensation | $14.0B |
| Working capital and other operating movements, including the deemed repatriation tax payment | −$10.5B |
| Operating cash flow | $145B |
| Less capital spending | −$9.80B |
| Free cash flow | $135B |

**Net income**

Nine months reported net income of $101,464 million plus the low-case fourth quarter of $26,344 million.

**Depreciation and amortization**

Nine months reported $9,973 million plus about $3.4 billion in the September quarter.

**Share-based compensation**

Nine months reported $10,523 million plus about $3.5 billion in the September quarter.

**Working capital and other operating movements, including the deemed repatriation tax payment**

Nine months of working capital was already an outflow of about $2.9 billion, including the $8.8 billion deemed repatriation tax payment; the September quarter adds a receivables build.

##### Capital spending

The nine months actually reported $6,799 million of capital spending; the fourth quarter carries about $3.0 billion in this case because committed tooling and facility work continues even with weaker revenue. The category split is my assumption.

| Tooling | $4.40B |
| --- | --- |
| Facilities | $4.70B |
| Data centers | $700M |
| Unallocated capital spending | $0 |
| Total capital spending | $9.80B |

**Tooling** Model estimate: about 45% of the year, driven by advanced-node process equipment for suppliers.

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

**Facilities** Model estimate: the Houston AI server and Mac mini facilities and the advanced manufacturing centre.

“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** Model estimate: private cloud compute capacity.

“in '25, we did have CapEx costs associated with building out our private cloud compute environment in our first-party data centers” “we're committed to invest $600 billion over the next 4 years with a focus on innovation in strategic areas like advanced manufacturing, silicon engineering and artificial intelligence”

#### Three ways the low case happens

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

1. **September shipments fall short as shortages deepen.** The company expects supply constraints to increase significantly in the September quarter. A September shortfall lowers full-year sales and earnings by the same amount, since the other quarters are reported; weaker volume also leaves a larger working-capital drag in the year's free cash flow.
  Watch September-quarter sales near the range floor on 2 November 2026.
  **Analyst reasoning**
  - **Analyst C** Supply constraints limit iPhone, Mac and iPad availability.
  - **Analyst E** Advanced-chip supply recovers slowly
  - **Analyst B** Prolonged advanced-node supply constraints capping iPhone and Mac shipments
2. **Memory costs push September margin below the guided floor.** Management expects even higher memory costs in September, only partly offset. A lower September margin trims full-year earnings per share; Analyst A's low case, with the deepest margin cut, sets the lowest earnings figure.
  Watch Gross margin below the guided floor on 2 November 2026.
  **Analyst reasoning**
  - **Analyst D** memory costs rising faster than price increases and carry-in inventory can offset
  - **Analyst E** Memory costs exceed pricing offsets
  - **Analyst C** Memory and storage costs compress product gross margin.
3. **Price rises dent iPad and Mac demand.** Apple raised iPad and Mac prices and said it was too early to judge the response. Softer demand trims September sales and leaves receivables building relative to sales, cutting the year's free cash flow.
  Watch iPad and Mac sales in the 2 November 2026 release.
  **Analyst reasoning**
  - **Analyst D** weaker consumer demand after price increases
  - **Analyst C** Higher prices and weaker consumer confidence reduce hardware demand.
  - **Analyst D** the low case has demand softening

September sales would have to fall to the bottom of the range or below, with gross margin under the guided floor, holding the year to sales of $474B, earnings per share of $8.70 and free cash flow of $135B. Analyst E goes furthest on sales, to $473B, because its September low lets sales, mix, memory costs and refunds disappoint together. Analyst A goes furthest on earnings per share, to $8.68, pairing weak September sales with a margin well below the floor.

Nine months are fixed, so even a poor September moves the year only slightly; the low case is a September-quarter story.

The five lows run from $473B (Analyst E) to $475B (Analyst D).

First sign The first sign is the 2 November 2026 report: September sales near or below the floor of the guided range.

#### Surfaced outlier views

For FY2026 the five analysts sit within 0.1% of the PricedIn number on sales and within 0.3% on diluted EPS. The furthest, and why:

- **Analyst B** · FY2026: sales **$477B**, the lowest of the five (PricedIn $477B)
  Why Analyst B takes the exact midpoint of the September guide rather than leaning above it, so its full-year sales sit marginally below Analysts D and E. Analyst B's capital spending of $10.4B is the highest of the five, and Analyst B's free cash flow of $138B sits slightly below the average free cash flow of $139B.
  “I take the middle (~$112.7B, +10%) as my base, with my low below the guidance floor (supply worse than assumed) and my high above the ceiling (a beat, as Apple delivered in Q1 and Q2 of this year).”
- **Analyst D** · FY2026: diluted EPS **$8.89**, the highest of the five (PricedIn $8.86)
  Why Analyst D puts September sales near the top of the range and gross margin a little above the middle, because the company has beaten its midpoint lately. That gives Analyst D's net income of $131B against Analyst B's net income of $130B, on Analyst D's sales of $478B.
  “I set September-quarter gross margin at about 47.7%, a little above the midpoint, since the company has landed at or above the top of its margin range lately.”

#### Watch

The 2 November 2026 report closes the year. September sales above the guided range with gross margin at its top point higher; sales near the floor or margin below the range point lower.

##### Sales

PricedIn **$507B** $470B – $538B

$470B $491B $507B $523B $538B

##### diluted EPS

PricedIn **$9.00** $7.70 – $10.00

$7.70 $8.43 $9.00 $9.55 $10.00

**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 on mid-single-digit sales growth and a step down in gross margin, but differ on costs and range. Analysts E and C see somewhat faster sales and higher earnings; Analyst A carries the heaviest operating costs and the lowest earnings. Analysts E and C also hold the widest ranges, Analyst B the narrowest.

The analysts expect fiscal 2027 sales of about $507B, slower growth as memory costs squeeze margin and earnings barely rise.

Sales **$507B** +6% on FY2026

*50% range* $491B – $523B *80% range* $470B – $538B

Diluted EPS **$9.00** +2% on FY2026

*50% range* $8.43 – $9.55 *80% range* $7.70 – $10.00

Base case

Gross margin **46.8%** 48.7% in FY2026

Operating margin **30.4%** 32.9% in FY2026

#### Investment and cash generation

Base case

Capital spending **$13.0B**

Free cash flow **$136B**

Free cash flow: operating cash flow less capital spending.

- **Cash capital spending rises to $13.0B, mostly for data centers serving Siri AI, tooling and American manufacturing facilities; these add capacity through the year and beyond. Operating cash flow of $149B less that spending gives free cash flow of $136B, defined as operating cash flow less capital spending, not a company measure. Earnings drive the cash, and the repatriation tax payments have ended. *3 of 5***
  - **Analyst A** it is why capital spending rises rather than falls in my forecast even though the hybrid model keeps the direct outlay modest.
  - **Analyst E** No repeated deemed-repatriation installment is forecast for 2027.
  - **Analyst B** lift capex from about $10.4B in FY2026 to $13B (FY2027) and $15.5B (FY2028) — my estimate, not a company plan.

Fiscal 2027 runs from late September 2026 to September 2027. It follows the strongest iPhone cycle in Apple's history, so comparisons get much harder, and it starts with chip shortages and a memory price surge the company called a hundred-year flood.

The company gives no outlook beyond the next quarter. It has said memory prices keep rising beyond September, that carry-in inventory will help less, that price rises may not offset costs and could cut demand, and that tariff refunds are one-off.

The analysts' middle case has sales growth of +6.2% and gross margin falling to +47%, with operating margin of +30% as research spending outpaces sales. Earnings per share reach $9.00, an earnings per share rise of +1.6%.

Buybacks do much of the work: with net income roughly flat, a smaller share count is what lifts earnings per share. Excluding the one-off refunds from fiscal 2026, Analyst D reckons underlying earnings growth is somewhat higher.

The range is the widest so far. In the low case earnings per share fall to $7.70; in the high case earnings per share reach $10.00, depending on memory costs, supply, consumer demand and legal rulings on search and the App Store.

Earnings per share of $9.00 rest on a lower gross margin, operating costs growing faster than sales and a diluted share count cut by buybacks, which turns roughly flat net income into a small per-share gain.

#### Sales by year

FY2023 $383B

FY2024 $391B +2%

FY2025 $416B +6%

FY2026 $477B +15%

FY2027 $507B +6%

FY2028 $537B +6%

The forecast years are the PricedIn forecast.

#### The year forecast, line by line

| Line | FY2025 reported | FY2026 forecast | FY2027 forecast |
| --- | --- | --- | --- |
| Net sales | $416B | $477B | $507B |
| Sales growth, year on year | +6% | +15% | +6% |
| Products | $307B | $355B | $370B |
| Services | $109B | $123B | $137B |
| Operating segments |  |  |  |
| Americas | $178B | $198B | $210B |
| Europe | $111B | $127B | $137B |
| Greater China | $64.4B | $81.1B | $83.3B |
| Japan | $28.7B | $31.7B | $34.1B |
| Rest of Asia Pacific | $33.7B | $39.7B | $43.0B |
| Cost of sales |  |  |  |
| Products | $194B | $216B | $236B |
| Services | $26.8B | $29.5B | $34.2B |
| Cost of sales | $221B | $245B | $270B |
| Gross margin | $195B | $232B | $237B |
| Gross margin | 46.9% | 48.7% | 46.8% |
| Research and development | $34.5B | $45.9B | $52.5B |
| Selling, general and administrative | $27.6B | $29.7B | $30.5B |
| Total operating expenses | $62.2B | $75.6B | $83.0B |
| Operating income | $133B | $157B | $154B |
| Operating margin | 32.0% | 32.9% | 30.4% |
| Other income/(expense), net | −$0.32B | $1.02B | $1.30B |
| Income before provision for income taxes | $133B | $158B | $156B |
| Provision for income taxes | $20.7B | $27.4B | $25.7B |
| Tax rate | 15.6% | 17.3% | 16.5% |
| Net income | $112B | $131B | $130B |
| Diluted (in shares) | 15.00B | — | 14.43B |
| Diluted EPS | $7.46 | $8.86 | $9.00 |

The lines as the company's statement shows them. The current year adds its reported months and its planned quarters line by line, without their shares. Its earnings per share is the forecast's own for the year, the number this tab shows: a company works out a year on the year's shares, so the quarters' figures need not add to it. 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 five 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

**Memory pricing surge**

Management describes a hundred-year flood with exponential increases in memory prices “we're in uh what i would characterized as a hundred year flood on the memory pricing with exponential increases in memory prices” Apple July 2026 earnings call

**Costs expected to intensify**

Supply constraints and component costs expected to intensify, possibly hurting revenue and gross margin “The Company expects these trends to intensify, which may materially negatively impact the Company’s revenue, costs, gross margin, results of operations and financial condition.” Apple June-quarter report

**Price rises may cut demand**

Price increases may not offset cost pressure and may reduce demand “Actions, such as price increases, that have been and may in the future be taken by the Company may not effectively mitigate these negative impacts, and may also reduce demand for the Company’s products and materially adversely affect the Company’s revenue, costs, gross margin, results of operations and financial condition.” Apple June-quarter report

**New buyback authorisation**

The board added a share repurchase authorisation 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.” Apple April 2026 earnings call

**Search licensing risk**

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

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

Base the middle forecast

FY2027

Sales **$507B**

Diluted EPS **$9.00**

Capital spending **$13.0B**

Free cash flow **$136B**

**FCF walk and spending detail**

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

| Net income (forecast) | $130B |
| --- | --- |
| Depreciation, amortization and share-based compensation, net of other non-cash items | $32.0B |
| Working capital and other operating movements, net | −$12.7B |
| Operating cash flow | $149B |
| Less capital spending | −$13.0B |
| Free cash flow | $136B |

**Net income (forecast)**

FY2027 net income of about $129.9B, consistent with EPS of $9.00 on 14.43 billion average diluted shares.

**Depreciation, amortization and share-based compensation, net of other non-cash items**

Forecast of roughly $14.5B depreciation and amortization plus $15.5B share-based compensation, growing with the AI investment cycle.

**Working capital and other operating movements, net**

Net drag from working capital and other operating items in line with recent years relative to sales.

##### Capital spending

Capex rises about 25% over FY2026 in my base case, mostly in data centers for Apple Intelligence compute and U.S. facilities; the split across Apple's named categories is my estimate, not a company plan, and a small remainder stays unallocated.

| data centers | $6.60B |
| --- | --- |
| tooling | $3.00B |
| facilities | $2.30B |
| retail investments | $800M |
| Unallocated capital spending | $300M |
| Total capital spending | $13.0B |

**data centers** My estimate: Siri AI usage growth requires more first-party compute even with the hybrid third-party cloud model.

“our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.” “The center is located in a facility where we currently assemble advanced AI servers.”

**tooling** My estimate, growing with volumes and new product ramps.

“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, weighted up for the Houston ramp and U.S. manufacturing program.

“our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.” “We're excited for the upcoming opening of the Apple Advanced Manufacturing Center in Houston.”

**retail investments** 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.” “we're shipping servers to power Apple Intelligence from our new manufacturing facility in Houston.” “And so we did have CapEx spending related to that in our results in December.”

#### Three ways the base case happens

These levers explain the outcome together.

1. **Growth slows to mid-single digits as the iPhone cycle annualises.** Fiscal 2026 hardware growth was exceptional; Siri AI, easing supply and services keep growth positive. Sales rise more slowly than in fiscal 2026 as harder comparisons offset new features, with services carrying a rising share of the total.
  Watch The December-quarter outlook on 2 November 2026 and iPhone growth through the holiday quarter.
  **Analyst reasoning**
  - **Analyst B** iPhone 17 cycle annualizing with Siri AI sustaining upgrades
  - **Analyst C** Services grows at a low-double-digit rate over the forecast while hardware growth slows after the exceptional fiscal 2026 cycle.
  - **Analyst D** I hold fiscal 2027 growth to about 6% and give the low case a decline to about 470 billion.
2. **Memory costs and the end of refunds cut gross margin.** Memory prices keep rising beyond September and carry-in protection fades; refunds are not expected to recur. Gross margin falls from fiscal 2026, the largest single drag on this year's earnings; the analysts assume recovery only from fiscal 2028.
  Watch Gross margin guidance for the December and March quarters.
  **Analyst reasoning**
  - **Analyst D** memory cost pressure taking gross margin to about 47%
  - **Analyst A** Memory costs raise product cost through fiscal 2027, cutting gross margin to about 46.7%
  - **Analyst B** Memory inflation peaking in FY2027 and easing in FY2028
3. **Research spending outgrows sales while buybacks support per-share earnings.** Research grew far faster than sales in fiscal 2026 on AI infrastructure and staff. Operating margin falls, so net income is roughly flat; a smaller diluted share count turns that into a small rise in earnings per share. Analyst A assumes the fastest cost growth and lands lowest.
  Watch Operating expense guidance each quarter and the pace of repurchases.
  **Analyst reasoning**
  - **Analyst A** Research and development and AI infrastructure push operating expense growth above revenue growth
  - **Analyst B** I raised FY2027 research and development to about $52.5 billion (operating expenses $83 billion)
  - **Analyst D** buybacks cutting share count about 2% a year

Sales must reach $507B, with sales growth of +6.2%, as the iPhone cycle annualises and services keep growing; gross margin must hold near +47% despite memory costs; and buybacks must keep shrinking the share count, giving earnings per share of $9.00 and free cash flow of $136B.

High about 1 chance in 10 of better

FY2027

Sales **$538B** +6% vs base

Diluted EPS **$10.00** +11% vs base

Capital spending **$14.5B**

Free cash flow **$157B**

**FCF walk and spending detail**

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

| Net income | $142B |
| --- | --- |
| Depreciation and amortization | $14.5B |
| Share-based compensation expense | $15.0B |
| Operating cash flow | $172B |
| Less capital spending | −$14.5B |
| Free cash flow | $157B |

**Net income**

High-case earnings per share of 9.85 on 14.433 billion diluted shares.

**Depreciation and amortization**

Rising with assets.

**Share-based compensation expense**

About 7% growth.

##### Capital spending

More data center capacity if Siri AI usage is heavy; no category amounts are disclosed, so the whole amount is left unallocated.

| Unallocated capital spending | $14.5B |
| --- | --- |
| Total capital spending | $14.5B |

“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 high case happens

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

1. **Memory prices peak early and roll over.** Memory price spikes have historically corrected within a few quarters as new capacity arrives. Gross margin holds near fiscal 2026 levels, so earnings grow faster than sales; easing component prices also release cash from inventory and prepayments, raising free cash flow.
  Watch Memory contract prices turning lower; gross margin guidance holding up into 2027.
  **Analyst reasoning**
  - **Analyst A** Memory contract prices roll over in calendar 2027, restoring product gross margin toward 38%
  - **Analyst B** Memory costs peaking earlier than the market expects
  - **Analyst A** memory price spikes of this magnitude have always ended in a correction, usually within four to six quarters, because high prices bring back capacity and curb demand.
2. **Siri AI and easing supply power a strong upgrade cycle.** Demand is running ahead of supply, and the rebuilt Siri launches this fall. Faster upgrades lift iPhone sales well above the middle case; more data center capacity is needed, so capital spending rises with earnings and free cash flow grows less than net income.
  Watch Upgrade rates and Siri AI adoption reported on the next two earnings calls.
  **Analyst reasoning**
  - **Analyst D** Siri AI spurring iPhone upgrades and paid cloud storage
  - **Analyst E** Supply expands to meet demand
  - **Analyst E** Upgrade demand stays strong despite pricing
3. **Services re-accelerate and China and India keep growing.** Greater China grew strongly in fiscal 2026 and India keeps setting records. High-margin services growth and emerging-market iPhone demand add sales and restore operating leverage as revenue outgrows research spending.
  Watch Services and Greater China growth in the December-quarter results.
  **Analyst reasoning**
  - **Analyst A** Services reaccelerates to double digits as new advertising inventory and AI subscription tiers scale
  - **Analyst B** Greater China and India momentum continuing
  - **Analyst A** Operating leverage returns because revenue grows faster than the research and development ramp

Supply would have to recover by the March quarter, memory prices peak early, Siri AI drive a strong upgrade cycle and price rises stick, lifting sales to $538B, earnings per share to $10.00 and free cash flow to $157B. Analyst E goes furthest, to sales of $568B and earnings per share of $11.12, because it lets supply, upgrade demand, services and mix all beat at once; Analyst E's cash capital spending rises to $19.0B with the higher earnings.

The high case needs no new product category: Analyst A's high path has memory contract prices rolling over in calendar 2027, while Analyst B points to continued China and India momentum.

The five highs run from $527B (Analyst B) to $568B (Analyst E).

First sign The first sign is the 2 November 2026 report: double-digit December growth guidance with gross margin near last year's.

Low about 1 chance in 10 of worse

FY2027

Sales **$470B** −7% vs base

Diluted EPS **$7.70** −14% vs base

Capital spending **$11.5B**

Free cash flow **$124B**

**FCF walk and spending detail**

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

| Net income | $111B |
| --- | --- |
| Depreciation and amortization | $14.2B |
| Share-based compensation | $14.6B |
| Other operating adjustments | −$2.00B |
| Net working-capital movement | −$1.37B |
| Operating cash flow | $136B |
| Less capital spending | −$11.5B |
| Free cash flow | $124B |

**Net income**

Low-case diluted EPS of $7.70 applied to 14.36 billion annual weighted-average diluted shares.

**Depreciation and amortization**

Forecast annual non-cash expense.

**Share-based compensation**

Forecast annual non-cash compensation.

**Other operating adjustments**

Forecast annual other operating outflow.

**Net working-capital movement**

Weak demand still leaves a modest net working-capital use for the year.

##### Capital spending

Capital spending is $11.5 billion in the low case, with the analyst's 40/20/10/30 split across tooling, facilities, retail and data centers.

| Tooling | $4.60B |
| --- | --- |
| Facilities | $2.30B |
| Retail investments | $1.15B |
| Data centers | $3.45B |
| Unallocated capital spending | $0 |
| Total capital spending | $11.5B |

**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.” “Payments for acquisition of property, plant and equipment (6,799) (9,473)”

#### Three ways the low case happens

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

1. **Memory costs keep climbing instead of peaking.** Management sees memory prices rising beyond September, and its quarterly report says cost trends will intensify. Gross margin falls well below the middle case, cutting earnings per share far more than sales; higher prices also pull cash into memory inventory and supplier prepayments, lowering free cash flow.
  Watch Gross margin guidance for the December quarter well below last year's level.
  **Analyst reasoning**
  - **Analyst A** Memory (DRAM/NAND) and advanced-node costs keep climbing instead of peaking, pushing product gross margin toward the mid-30s
  - **Analyst B** Memory cost inflation squeezing product gross margin toward 36% through FY2027
  - **Analyst C** Memory and storage costs compress product gross margin.
2. **Price rises meet a squeezed consumer and demand stalls.** Oil prices have jumped, borrowing costs are high and consumer sentiment sits near record lows. Weaker unit demand holds sales roughly flat on fiscal 2026; much of the tooling and facility spending is committed, so capital spending falls less than earnings and free cash flow drops.
  Watch Consumer sentiment and holiday sell-through; iPhone and Mac growth in the December quarter.
  **Analyst reasoning**
  - **Analyst D** weaker consumer demand after price increases
  - **Analyst B** Stagflationary macro finally denting consumer electronics demand
  - **Analyst A** Device price increases reduce unit demand in a weak consumer, with Brent crude above $120 a barrel and consumer sentiment at 51.7
3. **Services slow and legal rulings hit high-margin revenue.** Search licensing remedies, App Store rulings and possible large European fines are pending. Slower services growth removes the most profitable part of sales, widening the earnings fall; a one-off fine would hit a single period's earnings and cash.
  Watch Rulings in the Google search remedies case and the Supreme Court hearing of Apple's App Store appeal.
  **Analyst reasoning**
  - **Analyst D** loss of search licensing revenue or App Store fee limits
  - **Analyst E** Services growth and profitability soften
  - **Analyst B** Services deceleration from FX, App Store changes and mobile gaming

Memory costs would have to keep climbing, shortages persist, price rises dent demand in a squeezed economy and services slow, taking sales to $470B, earnings per share to $7.70 and free cash flow to $124B. Analyst E goes furthest on sales, to $464B, adding softer services profit and oil-driven downside. Analyst A goes furthest on earnings per share, to $7.20, because only it pairs falling margins with research spending still rising fast while revenue stalls.

A year ago memory was a slight tailwind; it turned fast, and management says the trends will intensify. Analyst B notes that the speed of the turn cautions against assuming a quick recovery.

The five lows run from $464B (Analyst E) to $487B (Analyst B).

First sign The first sign is the 2 November 2026 report: a December-quarter outlook implying weak growth, or gross margin guided well below last year's.

#### Surfaced outlier views

For FY2027 the five analysts sit within 1.6% of the PricedIn number on sales and within 1.8% on diluted EPS. The furthest, and why:

- **Analyst E** · FY2027: sales **$515B**, the highest of the five (PricedIn $507B)
  Why Analyst E has services growing strongly and keeps upgrade demand intact despite price rises, so Analyst E's sales growth of +7.8% compares with Analyst D's sales growth of +6.3%. It builds more owned data center capacity for AI, with Analyst E's capital spending of $15.0B against the average cash capital spending of $13.0B.
  “I forecast services of $138 billion in 2027 and $155 billion in 2028, alongside research spending of $53 billion and $58 billion.”
- **Analyst C** · FY2027: diluted EPS **$9.16**, the highest of the five (PricedIn $9.00)
  Why Analyst C holds operating costs lower relative to sales, giving Analyst C's operating margin of +31% against the average operating margin of +30%. With sales above the median as well, Analyst C's net income of $132B compares with Analyst A's net income of $127B.
  “Growth normalizes in fiscal 2027 and 2028 as comparisons become harder, while services, a large installed base and new artificial-intelligence features support high-single-digit to double-digit growth and continued buybacks lift per-share earnings.”

#### Watch

Quarterly gross margin guidance through fiscal 2027 is the key. Guides holding near fiscal 2026 levels point higher; steeper declines, lasting shortages, weak holiday demand or adverse search and App Store rulings point lower.

##### Sales

PricedIn **$537B** $480B – $590B

$480B $515B $537B $562B $590B

##### diluted EPS

PricedIn **$10.00** $7.80 – $11.40

$7.80 $8.95 $10.00 $10.70 $11.40

**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 that margins recover partly and buybacks keep lifting per-share earnings, but differ on growth. Analysts E and C expect faster sales growth and a fuller margin recovery; Analysts A and D see a slower recovery and land lowest on earnings. Analyst E's range is by far the widest.

The analysts expect fiscal 2028 sales of about $537B, with margins partly recovering as memory costs ease and buybacks lift earnings.

Sales **$537B** +6% on FY2027

*50% range* $515B – $562B *80% range* $480B – $590B

Diluted EPS **$10.00** +11% on FY2027

*50% range* $8.95 – $10.70 *80% range* $7.80 – $11.40

Base case

Gross margin **47.6%** 46.8% in FY2027

Operating margin **30.8%** 30.4% in FY2027

#### Investment and cash generation

Base case

Capital spending **$15.5B**

Free cash flow **$141B**

Free cash flow: operating cash flow less capital spending.

- **Cash capital spending of $15.5B continues building data centers for AI services, tooling and American manufacturing; Analyst E expects the largest owned compute build. Operating cash flow of $156B less that spending gives free cash flow of $141B, defined as operating cash flow less capital spending, not a company measure. Rising earnings and depreciation drive cash generation this year. *3 of 5***
  - **Analyst E** Base capital spending rises to $15 billion in 2027 and $18 billion in 2028.
  - **Analyst D** rising to 13 billion in 2027 and 14 billion in 2028 for private cloud compute and United States manufacturing
  - **Analyst A** it is why capital spending rises rather than falls in my forecast even though the hybrid model keeps the direct outlay modest.

Fiscal 2028 runs from late September 2027 to September 2028. No company outlook reaches this far, so the forecasts rest on the analysts' views of the memory cycle, adoption of artificial intelligence and Apple's investment plans.

Most analysts expect the memory price surge to ease as new supply arrives, typically within one to two years, letting gross margin recover partly from its fiscal 2027 low.

The middle case has sales growth of +5.9%, gross margin of +48% and operating margin of +31%, giving earnings per share of $10.00, an earnings per share rise of +11%.

Views diverge more here. Analysts E and C see faster growth and a fuller margin recovery; Analysts A and D see a slower recovery and heavier costs. Capital spending keeps rising for data centers and American facilities.

The range is wide: in the low case earnings per share fall to $7.80; in the high case earnings per share reach $11.40.

Earnings per share of $10.00 come from a partial margin recovery, operating costs growing more slowly than in fiscal 2027, and a diluted share count still falling with buybacks.

#### Each analyst's growth in FY2028

Analyst D +6%

Analyst E +7%

Analyst B +6%

Analyst A +6%

Analyst C +7%

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

#### The year forecast, line by line

| Line | FY2026 forecast | FY2027 forecast | FY2028 forecast |
| --- | --- | --- | --- |
| Net sales | $477B | $507B | $537B |
| Sales growth, year on year | +15% | +6% | +6% |
| Products | $355B | $370B | $385B |
| Services | $123B | $137B | $152B |
| Operating segments |  |  |  |
| Americas | $198B | $210B | $222B |
| Europe | $127B | $137B | $145B |
| Greater China | $81.1B | $83.3B | $86.6B |
| Japan | $31.7B | $34.1B | $36.2B |
| Rest of Asia Pacific | $39.7B | $43.0B | $47.7B |
| Cost of sales |  |  |  |
| Products | $216B | $236B | $244B |
| Services | $29.5B | $34.2B | $37.6B |
| Cost of sales | $245B | $270B | $281B |
| Gross margin | $232B | $237B | $256B |
| Gross margin | 48.7% | 46.8% | 47.6% |
| Research and development | $45.9B | $52.5B | $57.5B |
| Selling, general and administrative | $29.7B | $30.5B | $32.5B |
| Total operating expenses | $75.6B | $83.0B | $90.0B |
| Operating income | $157B | $154B | $166B |
| Operating margin | 32.9% | 30.4% | 30.8% |
| Other income/(expense), net | $1.02B | $1.30B | $1.40B |
| Income before provision for income taxes | $158B | $156B | $167B |
| Provision for income taxes | $27.4B | $25.7B | $27.5B |
| Tax rate | 17.3% | 16.5% | 16.5% |
| Net income | $131B | $130B | $140B |
| Diluted (in shares) | — | 14.43B | 13.95B |
| Diluted EPS | $8.86 | $9.00 | $10.00 |

The lines as the company's statement shows them. The current year adds its reported months and its planned quarters line by line, without their shares. Its earnings per share is the forecast's own for the year, the number this tab shows: a company works out a year on the year's shares, so the quarters' figures need not add to it. 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 five 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

**American investment pledge**

Four-year investment commitment focused on advanced manufacturing, silicon engineering and AI “we're committed to invest $600 billion over the next 4 years with a focus on innovation in strategic areas like advanced manufacturing, silicon engineering and artificial intelligence” Apple October 2025 earnings call

**Hybrid cloud model**

Apple keeps building private cloud compute while also using outside capacity “We'll continue to want to build out private cloud compute, as Tim outlined, as we have more usage there over time. But I think in general, we want to continue to have this hybrid model.” Apple October 2025 earnings call

**Computing resources risk**

AI infrastructure demand has constrained supply and raised costs across the industry “Demand for cloud computing and artificial intelligence infrastructure has increased substantially across the technology industry, resulting in constrained supply, extended lead times, and increasing costs.” Apple June-quarter report

**European fine exposure**

European regulators could impose fines scaled to Apple's 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 2025 annual report

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

Base the middle forecast

FY2028

Sales **$537B**

Diluted EPS **$10.00**

Capital spending **$15.5B**

Free cash flow **$141B**

**FCF walk and spending detail**

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

| Net income (forecast) | $140B |
| --- | --- |
| Depreciation, amortization and share-based compensation, net of other non-cash items | $34.5B |
| Working capital and other operating movements, net | −$17.5B |
| Operating cash flow | $156B |
| Less capital spending | −$15.5B |
| Free cash flow | $141B |

**Net income (forecast)**

FY2028 net income of about $139.5B, consistent with EPS of $10.00 on 13.95 billion average diluted shares.

**Depreciation, amortization and share-based compensation, net of other non-cash items**

Forecast of roughly $16B depreciation and amortization plus $16.5B share-based compensation as prior investment depreciates.

**Working capital and other operating movements, net**

Net drag from working capital and other operating items in line with recent years; higher cash taxes as one-time refunds fade.

##### Capital spending

Capex continues rising in my base case as Apple Intelligence compute and U.S. manufacturing expand; the split across Apple's named categories is my estimate, not a company plan.

| data centers | $8.20B |
| --- | --- |
| tooling | $3.40B |
| facilities | $2.70B |
| retail investments | $900M |
| Unallocated capital spending | $300M |
| Total capital spending | $15.5B |

**data centers** My estimate: continued Siri AI compute buildout under the hybrid model.

“our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.” “The center is located in a facility where we currently assemble advanced AI servers.”

**tooling** My estimate, growing with volumes.

“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, weighted up for continued U.S. manufacturing expansion.

“our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.” “We're excited for the upcoming opening of the Apple Advanced Manufacturing Center in Houston.”

**retail investments** 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.” “we're shipping servers to power Apple Intelligence from our new manufacturing facility in Houston.” “And so we did have CapEx spending related to that in our results in December.”

#### Three ways the base case happens

These levers explain the outcome together.

1. **Memory costs ease and gross margin partly recovers.** New memory capacity usually takes one to two years to arrive, ending price spikes. A higher gross margin than in fiscal 2027 lifts earnings faster than sales; the analysts assume only partial recovery, not a return to fiscal 2026 levels.
  Watch Memory contract prices during 2027 and gross margin guidance for the second half of fiscal 2027.
  **Analyst reasoning**
  - **Analyst B** elevated memory costs plausibly persist through most of FY2027 and then ease into FY2028
  - **Analyst A** That is why my base case has gross margin bottoming around 46.7% in fiscal 2027 and recovering to 47.4% in fiscal 2028
  - **Analyst E** base 2027 gross margin is 47%, recovering to 48% in 2028.
2. **Services and the installed base sustain steady growth.** Over two and a half billion active devices and rising paid subscriptions feed services. Services keep growing faster than hardware, raising the share of high-margin revenue and supporting gross margin.
  Watch Services growth through fiscal 2027 staying near double digits.
  **Analyst reasoning**
  - **Analyst B** I forecast services growth of about 11% in FY2027 and FY2028
  - **Analyst E** Services expand with the installed base
  - **Analyst C** keep services growth comparatively resilient
3. **Buybacks keep cutting the share count.** The net-cash-neutral target was dropped, leaving the buyback pace a choice. A smaller share count adds to per-share growth each year; a slower pace would trim earnings per share without changing net income.
  Watch Quarterly repurchase totals and any change in capital return policy under the new chief executive.
  **Analyst reasoning**
  - **Analyst A** Share repurchases of roughly $100 billion a year and steady services growth support earnings per share
  - **Analyst B** Buybacks reducing diluted shares about 2.5-3% a year
  - **Analyst E** forecast diluted shares decline more slowly than a mechanical cash-return model

Memory costs must ease enough for gross margin to recover to about +48%; sales must reach $537B, with sales growth of +5.9%; and operating costs must grow more slowly than in fiscal 2027, giving earnings per share of $10.00 and free cash flow of $141B.

High about 1 chance in 10 of better

FY2028

Sales **$590B** +10% vs base

Diluted EPS **$11.40** +14% vs base

Capital spending **$16.0B**

Free cash flow **$170B**

**FCF walk and spending detail**

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

| Net income | $155B |
| --- | --- |
| Depreciation and amortization | $15.5B |
| Share-based compensation expense | $16.0B |
| Operating cash flow | $186B |
| Less capital spending | −$16.0B |
| Free cash flow | $170B |

**Net income**

High-case earnings per share of 10.95 on 14.15 billion diluted shares.

**Depreciation and amortization**

Asset base growth.

**Share-based compensation expense**

About 7% growth.

##### Capital spending

Higher AI infrastructure spending with strong usage; no category amounts are disclosed, so the whole amount is left unallocated.

| Unallocated capital spending | $16.0B |
| --- | --- |
| Total capital spending | $16.0B |

“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 high case happens

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

1. **Memory prices fall back and margin recovers fully.** Past memory spikes ended in corrections as capacity returned. Gross margin back near fiscal 2026 levels lifts earnings much faster than sales.
  Watch Memory prices falling during 2027.
  **Analyst reasoning**
  - **Analyst A** why my high path has margin back near 49%
  - **Analyst B** Memory costs peaking earlier than the market expects
  - **Analyst C** Product mix, pricing and services leverage offset memory and storage inflation.
2. **Siri AI drives faster upgrades across the installed base.** The installed base tops two and a half billion devices. Faster refresh lifts hardware sales; more owned data center capacity raises capital spending alongside earnings.
  Watch Upgrade rates reported during fiscal 2027.
  **Analyst reasoning**
  - **Analyst A** Siri AI becomes a genuine upgrade driver and the installed base of 2.5 billion devices refreshes faster
  - **Analyst E** Upgrade demand stays strong despite pricing
  - **Analyst D** Siri AI spurring iPhone upgrades and paid cloud storage
3. **Services re-accelerate with new AI tiers and advertising.** Services set records across advertising, cloud and payments in the June quarter. Double-digit services growth adds high-margin sales, restoring operating leverage.
  Watch Services growth in the fiscal 2027 quarters.
  **Analyst reasoning**
  - **Analyst A** Services reaccelerates to double digits as new advertising inventory and AI subscription tiers scale
  - **Analyst C** Services maintains double-digit growth across advertising, cloud and payments.
  - **Analyst D** services growth staying in double digits

Memory prices would have to fall back, Siri AI become a real upgrade driver and services re-accelerate, lifting sales to $590B, earnings per share to $11.40 and free cash flow to $170B. Analyst E goes furthest, to sales of $634B and earnings per share of $13.60, because it lets supply, upgrades, services and mix all beat together; Analyst E's cash capital spending rises to $24.0B to match.

Analyst A's high path has gross margin back near its fiscal 2026 level; Analyst C's high case adds services leverage on top of faster supply.

The five highs run from $566B (Analyst A) to $634B (Analyst E).

First sign The first sign is memory prices turning down during 2027 while gross margin guidance recovers.

Low about 1 chance in 10 of worse

FY2028

Sales **$480B** −11% vs base

Diluted EPS **$7.80** −22% vs base

Capital spending **$14.0B**

Free cash flow **$123B**

**FCF walk and spending detail**

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

| Net income (forecast) | $120B |
| --- | --- |
| Depreciation, amortization and share-based compensation, net of other non-cash items | $34.0B |
| Working capital and other operating movements, net | −$17.0B |
| Operating cash flow | $137B |
| Less capital spending | −$14.0B |
| Free cash flow | $123B |

**Net income (forecast)**

Low-case FY2028 net income of $120.0B, consistent with EPS near $8.60 on about 13.95 billion average diluted shares ($120.0B divided by 13.95B shares).

**Depreciation, amortization and share-based compensation, net of other non-cash items**

Close to base; investment continues.

**Working capital and other operating movements, net**

Net drag as demand softens.

##### Capital spending

Same company-named categories; the low case spends less on tooling and retail. Allocation is my estimate, not a company plan.

| data centers | $7.40B |
| --- | --- |
| tooling | $3.08B |
| facilities | $2.44B |
| retail investments | $840M |
| Unallocated capital spending | $240M |
| Total capital spending | $14.0B |

**data centers** My estimate; slower adoption trims the ramp.

“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 on softer volumes.

“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; committed projects continue.

“our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.” “We're excited for the upcoming opening of the Apple Advanced Manufacturing Center in Houston.”

**retail investments** My estimate, trimmed.

“our CapEx is made of several different line items that include tooling, our facilities, retail investments -- investments in our retail store, data centers.” “we're shipping servers to power Apple Intelligence from our new manufacturing facility in Houston.”

#### Three ways the low case happens

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

1. **Memory costs stay high through fiscal 2028.** Management says cost trends will intensify and gives no date for normalisation. Gross margin stays near or below fiscal 2027 levels, cutting earnings sharply; component inflation keeps tying up cash in inventory.
  Watch Memory contract prices still rising in mid-2027.
  **Analyst reasoning**
  - **Analyst E** They do not establish a date for cost normalization, so I retain the wider 2027 and 2028 sales and earnings ranges rather than adopt A's narrower ones.
  - **Analyst C** Memory and storage costs compress product gross margin.
  - **Analyst E** Memory costs exceed pricing offsets
2. **A weak consumer and higher prices shrink hardware demand.** High oil prices and borrowing costs strain household budgets. Sales fall below the middle case, while committed investment and staff costs keep spending high and squeeze earnings.
  Watch Consumer sentiment and iPhone trends during fiscal 2027.
  **Analyst reasoning**
  - **Analyst E** It helps justify downside asymmetry in 2027 and 2028.
  - **Analyst B** is the most plausible trigger of my low case
  - **Analyst C** Higher prices and weaker consumer confidence reduce hardware demand.
3. **Costs keep rising while revenue stalls.** AI research and infrastructure spending has grown far faster than sales. Operating margin keeps falling; Analyst A's low case lets research spending grow strongly against flat revenue.
  Watch Operating expense guidance through fiscal 2027.
  **Analyst reasoning**
  - **Analyst A** Research and development spending keeps rising over 20% a year while revenue does not
  - **Analyst D** Operating expenses are growing faster than sales, driven by research and development on artificial intelligence.
  - **Analyst B** I raised FY2027 research and development to about $52.5 billion (operating expenses $83 billion)

Memory costs would have to stay high, research spending keep rising fast and consumer demand weaken, holding sales to $480B, earnings per share to $7.80 and free cash flow to $123B. Analyst E goes furthest, to sales of $474B and earnings per share of $7.20, because it widens the downside for oil-driven consumer weakness and softer services profit while costs stay sticky.

Fiscal 2028 has no company guidance, so the low case reflects the analysts' judgement on how long memory costs and a weak consumer last.

The five lows run from $474B (Analyst E) to $508B (Analyst B).

First sign The first sign comes with the 2 November 2026 outlook and later quarterly gross margin guides: no recovery by mid-2027 points to the low path.

#### Surfaced outlier views

For FY2028 the five analysts sit within 3.0% of the PricedIn number on sales and within 4.5% on diluted EPS. The furthest, and why:

- **Analyst E** · FY2028: sales **$553B**, the highest of the five (PricedIn $537B)
  Why Analyst E keeps growth higher in both years, giving Analyst E's sales growth of +7.4% against Analyst D's sales growth of +5.9%, with services and mix lifting Analyst E's gross margin to +48%. Analyst E's capital spending of $18.0B is the highest of the five, for owned AI compute.
  “Higher memory costs then outweigh some favorable mix: base 2027 gross margin is 47%, recovering to 48% in 2028.”
- **Analyst A** · FY2028: diluted EPS **$9.55**, the lowest of the five (PricedIn $10.00)
  Why Analyst A carries the heaviest operating costs, extrapolating fast research growth, and only a partial margin recovery. Analyst A's operating margin of +30% compares with the average operating margin of +31%, and Analyst A's net income of $134B compares with Analyst C's net income of $143B.
  “I extrapolate a 19% rise in research and development in fiscal 2027 and 14% in fiscal 2028, with the rest of operating expense growing more slowly, so total operating expense reaches $84.7 billion and $93.5 billion; that is the main reason operating margin falls from 32.9% to about 30.0% even before the gross margin hit.”

#### Watch

Watch memory contract prices and gross margin guidance through 2027, Siri AI upgrade data and services growth. Falling memory prices and steady services point higher; persistent cost inflation, rising research spending or adverse legal rulings point lower.

The years at a glance · sales

FY2023 **$383B**

FY2024 **$391B**

FY2025 **$416B**

FY2026 **$477B** $474B – $481B

FY2027 **$507B** $470B – $538B

FY2028 **$537B** $480B – $590B

$400B $450B $500B $550B $600B

50% range 80% range

The years at a glance · diluted EPS

FY2023 **$6.13**

FY2024 **$6.08**

FY2025 **$7.46**

FY2026 **$8.86** $8.70 – $9.02

FY2027 **$9.00** $7.70 – $10.00

FY2028 **$10.00** $7.80 – $11.40

$6.00 $8.00 $10.00

50% range 80% range