# AAPL Quarter forecast · Q4 FY26

> Apple reports Q4 FY26. Our numbers below have a cutoff of 18 October 2026, 06:44 ET and do not change. Minutes after the release, the release review shows what it reported against them.

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

Monday 2 November, about 16:30 ET

Apple reports Q4 FY26. Our numbers below have a cutoff of 18 October 2026, 06:44 ET and do not change. Minutes after the release, the release review shows what it reported against them.

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

## AAPL reports Q4 FY26 on 2 November 2026

release about 16:30 ET · call 17:00 ET

Next report · 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

### Q4 FY26 · the quarter AAPL reports

##### 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.

### Q1 FY27 · the quarter after

##### 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.

#### 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.