Apple’s demand is strong, but temporary tariff refunds flatter profitability while memory and AI costs rise. My $290.92 twelve-month target assumes continued revenue growth, not a failed product cycle.
Key points
- $290.92 a share is my twelve-month target, despite continued sales growth.
- 2 percentage points of June-quarter gross margin came from tariff refunds.
- $10.39 a share is my fiscal 2028 earnings forecast, including employee stock costs.
The call
The market is too optimistic about lasting profitability. At my 28 times earnings benchmark, today’s price requires fiscal 2028 earnings of $12.02 a share. With my revenue forecast, that means 53.5% gross margin, the share of sales left after product and service costs.
Gross margin: refunds lifted the peak, not the outlook- Reported gross margin
- My gross-margin forecast
SEC filings and July 30 call; desk history. My quarterly forecasts as of October 7, 2026.
I expect growth without that margin breakthrough. My fiscal 2028 forecast combines $555 billion of revenue with 48.5% gross margin. New phones support demand, but cheaper inventory protection is fading and AI spending is rising. Holiday results should distinguish a successful upgrade cycle from a lasting acceleration in profit.
Valuation
| Driver | My estimate |
|---|
| Fiscal 2028 revenue | $555 billion |
| Fiscal 2028 gross margin | 48.5% |
| Fiscal 2028 operating expenses | $93 billion |
| Fiscal 2028 diluted earnings | $10.39 a share |
| October 2027 earnings multiple | 28 times fiscal 2028 earnings |
| Twelve-month target | $290.92 a share |
Earnings assume a 17.5% tax rate, 14.1 billion diluted shares and $1.4 billion of other income. The multiple rewards recurring Services revenue and customer loyalty, but not software-like growth across the whole business. Illustrative bull and bear outcomes of $389 and $211 a share make a sell preferable to chasing the launch excitement.
Each margin point changes my target by about $9 a shareMy FY28 scenarios, October 7, 2026; revenue $555 billion, operating expenses $93 billion, 28 times earnings.
Risks
- Demand could beat my forecast: watch holiday iPhone sales and whether chip shortages ease without discounting.
- Costs could improve faster: watch gross margin excluding refunds and whether component inventories remain protective rather than become excess stock.
- Investors could keep paying more: watch paid Siri adoption and lower interest rates supporting a richer earnings multiple.
What would change my mind
I would reconsider if two consecutive fiscal 2027 quarters deliver revenue growth above 12% and gross margin above 50% excluding tariff refunds.