Key Takeaways
- Apple shares jumped 6% today after Bernstein raised its price target to $380 from $370.
- Microsoft and Amazon rose about as much on no news of their own, pointing to a Big Tech rally.
- Apple guides holiday revenue up 7% to 10%, but memory prices from suppliers like Micron will pull its gross margin to 45%-46%.
- Apple already traded near its five-year valuation high, so I wouldn’t chase the jump.
Apple (AAPL) shares are up 6% today, erasing Tuesday’s 2% drop. News was thin: Bernstein raised its price target to $380 from $370 this morning and kept its Outperform rating.
But Microsoft (MSFT) and Amazon (AMZN) are rallying just as hard. And Tuesday’s drop came from the memory prices Micron (MU) keeps raising.
The details
After Monday’s close, Apple beat estimates for the September quarter and guided holiday-quarter revenue up 7% to 10%.
The problem was the 45% to 46% gross margin guide, below the 46.3% analysts expected. CFO Kevan Parekh said higher memory costs explain most of the drop.
The holiday math
At the guide’s midpoints, holiday revenue would grow about 8.5%, but gross profit only about 2%, since last year’s December quarter carried a 48.2% gross margin.
Analysts went in expecting normalized EPS to grow 8% in fiscal 2027:
And CEO John Ternus said that beyond December, “we see the pricing for memory purchases continuing to increase.” I’d expect fiscal 2027 estimates to drift lower from here.
Big Tech did the heavy lifting
Microsoft is up 6% and Amazon is up 7%, on no company news. Both grow faster: Azure revenue rose 48% and AWS 39% last quarter. Yet before today, Microsoft traded at 25x forward earnings and Amazon at 24x. Apple was at 37x, near the top of its five-year range:
At today’s price, it’s even higher, right around its five-year peak of 38x.
TIKR tracks 43 analysts on Apple. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Apple, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Apple’s Analyst Ratings
Micron holds the pricing power
Micron is on the winning side of Apple’s squeeze. It earned a 90% gross margin on phone and PC memory in its quarter to Sept. 3, up from 36% a year earlier. Its December report will show whether memory prices are still climbing, which matters more for Apple than Bernstein’s extra $10.
Hold the cheering
Apple’s price assumes the memory squeeze ends quickly. To reach Bernstein’s $380, the stock would need a multiple above its five-year high, while estimates look more likely to fall. I wouldn’t chase this jump.
Of course, if Apple’s late-January report shows memory costs leveling off, the bulls will look right early.
So what is Apple stock actually worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what Apple could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
