New Apple Price Target, Position After Impressive Earnings
I'm getting into this mega-cap name after digging into the latest earnings report.
You're reading 0 of 1 free page.
Register to read more or Unlock Pro — 50% Off Ends Soon
On Wednesday evening, mega-cap consumer electronics/services giant Apple (AAPL) released the firm's fiscal second quarter financial results. For the three-month period ended December 27, 2025, Apple posted a GAAP EPS of $2.84 on revenue of $143.756 billion.
These top- and bottom-line numbers both easily beat Wall Street's expectations while that sales print was good enough for year-over-year growth of 15.7%. To be honest, I thought Apple might have a decent quarter, but I was not invested in the name at this time. This is an excellent quarter. Easily beat my expectations as well as those of my peers.
Operations
As net sales grew 15.7% to $143.756 billion, the cost of those sales increased 12.9% to $74.525 billion. The left a gross profit of $69.231 billion (+19%) as gross margin improved from 46.9% to 48.2%. This was far better than consensus view. Operating expenses grew 19% as well to $18.379 billion. That produced an operating income of $50.852 billion (+18.7%) as operating margin improved from 34.5% to 35.4%. Again, this is significantly better than what we were looking for.
After accounting for interest, other income and expenses and taxes, GAAP net income printed at $42.097 billion (+15.9%). This works out to $2.84 per fully diluted share, up from $2.40 for the year-ago comparison. This is also considerably better than the $2.65 to $2.70 range that Wall Street seemed to be focused on.
Segment Performance
- Products generated sales of $113.743 billion (+16.1%), producing a gross income of $46.265 billion (+20.1%) on a gross margin of 40.7%, up from 39.3%
- Services generated sales of $30.013 billion (+13.9%), producing a gross income of $22.966 billion (+16,2%) on a gross margin of 76.5%, up from 75.0%
Product Sales Performance
- iPhone generated sales of $85.269 billion (+23.3%), obliterating expectations
- Wearables, Home generated sales of $11.493 billion (-2.2%), missing expectations
- iPad generated sales of $8.595 billion (+6.3%), beating expectations
- Mac generated sales of $8.386 billion (-6.7%), falling short of expectations.
Geographic Sales Performance
- Americas generated sales of $58.529 billion (+11.2%), beating expectations
- Europe generated sales of $38.146 billion (+12.7%), missing expectations
- Greater China generated sales of $25.526 billion (+37.9%), crushing expectations
- Japan generated sales of $9.413 billion (+4.7%), missing expectations
- Rest of Asia Pacific generated sales of $12.142 billion (+18%), beating expectations
Guidance
During the call, CFO Kavan Parekh said, "We expect our March quarter total company revenue to grow by 13% to 16% year-over-year, which comprehends our best estimates of constrained iPhone supply during the quarter."
Wall Street has been looking for something if the 13.6% to 13.7% range for growth. Parekh then added, "We expect gross margin to be between 48% and 49%. We expect operating expenses to be between $18.4 billion and $18.7 billion."
Fundamentals
For the period reported, Apple generated operating cash flow of $53.925B (+80.1%, really). Out of that number came capex spending of $2.373 billion (-19.3%, really). This left free cash flow of $51.552 billion (+91%, incredibly). Out of that number, the firm repurchased $24.701 billion worth of common stock for the corporate treasury and paid out cash dividends of $3.921 billion.
Turning to the balance sheet, Apple ended the period with cash and investments labeled as "current" of $66.9 billion and another $77.888 billion in marketable investments labeled as non-current for a cash position of $144.788 billion. The way the firm splits up its cash assets literally renders the current and quick ratios irrelevant.
Total assets amount to $379.297 billion. The firm does not claim any goodwill or other intangible as assets, which is truly admirable given what the brand name alone must be worth. Total assets less equity comes to $291.107 billion including $77.685 billion of term debt. The firm could, if it had to, pay that off out of pocket nearly two times over.
Thoughts
Like I said: Strong quarter. Profitability soared. Cash flows ran wild, unlike what we see across some of the other mega-caps that have been more aggressive upspending on AI. Guidance is solid. The balance sheet is strong. I do not see an overt weakness. Is it safe to get back in AAPL? I think it might be. It's been a while for my followers.
The stock still lives under the threat of the above incomplete head-and-shoulders pattern. That said, relative strength is out of the gutter. The daily MACD is improving as well. The histogram of the nine-day EMA has gone positive this week for the first time since early December. Additionally, while both still reside in negative territory, the 12-day EMA has crossed above the 26-day EMA. That's a bullish signal.
Readers will see that, earlier this month, AAPL found support at a precise 38.2% Fibonacci retracement of the stock's April into early December rally.
Resistance has been met at the 21-day EMA, suggesting that the swing crowd has not yet been won over. That's the door to the 50-day SMA at $268 which is the pivot. I am OK with initiating around here. I am OK with adding down to the 200-day SMA. After this article becomes public information and I do initiate, my target price will be $321.
At the time of publication, Guilfoyle had no positions in any securities mentioned.
