Apple on Thursday evening reported quarterly beats on its top and bottom lines. But even the world’s greatest consumer products company is not immune to skyrocketing memory prices caused by massive shortages. Revenue in Apple’s fiscal 2026 third quarter ended June 27 increased 16% to $109.42 billion, ahead of the $108.65 billion expected, according to LSEG. Earnings per share (EPS) jumped 29% to $2.02, ahead of estimates of $1.89, according to LSEG. Tariff refunds added about 11 cents to EPS. Stripping out the benefit, earnings exceeded expectations by 2 cents. Why we own it Apple’s dominant hardware and high-margin services businesses provide a deep competitive moat and plenty of bundling opportunities. Competitors: Samsung, Xiaomi, OPPO, Dell , and HP Inc. Most recent buy : April 8, 2014 Initiation : Dec. 2, 2013 Bottom line It was a good but not great quarter as Apple worked to mitigate the memory crunch, which impacted the reported quarter and is expected to be a greater headwind down the line. That sent shares down nearly 6% in after-hours trading. On the post-earnings call, outgoing CEO Tim Cook noted that fiscal Q3 did exceed expectations “despite supply constraints and sequential foreign exchange headwinds.” Ultimately, we view the print as about as good as we could have hoped for, given what we already knew about memory dynamics and the actions Apple finally took last month to pass along some of the pain to consumers. On June 25, the company announced bigger-than-expected price hikes on its MacBooks and iPads. The stock had its worst single session in more than a year and served as a near-term bottom. Since then, Apple shares soared to record highs and briefly became the second U.S. company with a market value over $5 trillion. AAPL YTD mountain Apple YTD Since the memory shortage is impacting all device makers, we see no reason to be overly negative that it’s hitting Apple and therefore still think this is a name you want to own long-term. That said, we have to acknowledge that the stock came into the print hot and forward commentary will likely put a cap on the near-term upside. Two wildcards are coming up. On Sept. 1, Cook steps back into an executive chairman role and turns the CEO reins over to John Ternus. September also brings Apple’s annual iPhone launch event, and that’s when we could hear whether prices on the company’s flagship device will be going up like Macs and iPads. Against that near-term uncertainty, we’re reiterating our hold-equivalent 2 rating but raising our price target to $340 from $300 as we look out to 2027, when broader availability of Apple Intelligence will increase the value of an iPhone and, in turn, what folks may be willing to pay for an Apple device. On the call, Cook said, “We’re excited about the work we’re doing on the next generation of Apple intelligence, including Siri AI and the AI features we’re developing across our platforms.” He added, “These experiences are intuitive and useful, while…
Read More: We’re raising our Apple price target, seeing plenty of good despite memory