New Apple Price Target on iPhone 17 Success and $109 Billion 'Steady Hand'
The company is hitting on multiple key cylinders, which should bring wonderful operating leverage.
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We are boosting our price target on shares of Apple (AAPL) to $305 from $275 following the company’s better-than-expected September-quarter results, but primarily due to its improved outlook for the current quarter.
Management guided current-quarter revenue to climb 10%-12% compared to the year-ago quarter, benefiting from a full quarter of new iPhone models and continued growth in the high-margin Services business. Data points across the supply chain support that outlook, as does the company’s growing install base of users.
We’ve talked before about the razor-razorblade-like quality of the relationship between Apple’s hardware and Services business and how the growth in the higher-margin business has helped steady Apple’s earnings. Compared to two years ago, the Services business accounted for 45% of Apple’s gross profit mix in the September 2025 quarter, compared to 35%, which helped drive overall gross profit margins to more than 47% vs. 44% back then. During the recently completed quarter, Apple set new all-time records across advertising, App Store, cloud services, Music, payment services, and video.
Our point is that while the microscope tends to focus on the iPhone, the steady hand at Apple is the Services business. And to put the size of that business into context, its trailing 12-month revenue of ~$109 billion is bigger than what Wall Street expects Disney (DIS) to deliver next year and is more than twice as large as Netflix (NFLX) on that basis.
What we are seeing now is Apple hitting on multiple key cylinders — iPhone and Services. Apple sees iPhone revenue growing double-digits year over year due to what we suspect is a combination of volume, but also the mix benefit toward higher-end iPhone 17 models. The Services segment is expected to deliver another quarter of double-digit gains, which we attribute to higher attach rates across that growing install base, but also select price hikes taken earlier this year. We also see more inroads for Apple's advertising business, and, as we discussed, this could come to the company’s Maps offering in the coming year.
That should bring some strong operating leverage in the current quarter, and also because Apple shared that it is currently capacity-constrained for its newer models into 2026. This means we’re likely to see consensus EPS expectations for Apple trend higher for the coming quarters. It also means we likely won’t be alone in boosting our price target.
Looking to 2026
As we think about 2026, there are a few things on the horizon that keep us bullish. While that includes a full year of incrementally higher-priced iPhone models and Services, during the earnings call, Apple CEO Tim Cook confirmed the more personal, AI-backed Siri is on track to launch next year. Next year is also expected to bring the much-discussed iPhone Fold to market. We could also see Apple bring other AI enhancements to Apple Intelligence as it ramps up its investment in the technology.
Because we still have a few weeks to go in the current earnings season, it means confirming Apple’s forecast by sizing it up against key suppliers that have yet to report. Qualcomm (QCOM) , Universal Display (OLED) , and Qorvo (QRVO) are some of those. And as we move through the holiday season and into 2026, we’ll continue to track monthly sales reports from Taiwan Semiconductor (TSM) and Foxconn (FXCOF). Based on what we learn from those and other data points, we’ll revisit our new AAPL price target as needed.
Our Apple Game Plan
In terms of AAPL shares, the post-earnings reaction is likely to push them deeper into an overbought condition — and our investment style typically isn’t to chase stocks that land in that area. In keeping our Two rating, the next layers of support for the shares clock in at the 20-day moving average ($257.89) and the 50-day moving average ($247.34).
The question is whether or not AAPL shares will get there if we receive confirming signs for that expected iPhone ramp. For the Pro Portfolio and its existing AAPL stake, that would land in the camp of a good problem to have.
On the housekeeping front, as we reset our AAPL price target, we will also raise our panic point to $222.
At the time of publication, TheStreet Pro Portfolio was long AAPL, QCOM and OLED.
