Apple’s shares have surged roughly 22% so far in 2026, outpacing the broader market and sitting near a 38 times forward earnings multiple. The rally has been propelled largely by the company’s high-margin services segment, yet the most recent quarter showed a deceleration that could pressure the lofty valuation.
In the fiscal fourth quarter that ended September 26, services revenue grew only 10% year-over-year, down from the 12% pace recorded in the prior quarter. Management signaled an even more modest 8%-9% growth outlook for the first quarter of fiscal 2027, citing headwinds from third-party licensing arrangements and currency fluctuations. Notably, the annual report omitted any reference to the App Store as a growth driver, limiting the narrative to advertising and cloud services alone.
Why services matter for Apple’s earnings power
The services business carries a 76% gross margin, almost double the 39% margin earned on hardware. It contributed roughly 40% of Apple’s total gross profit in the most recent fiscal year. Consequently, analysts forecast long-term earnings growth of less than 11% per year; any sustained slowdown in services could force the market to re-price the stock at a lower multiple, curbing upside potential.
Despite the services dip, Apple’s product side remains robust. Total revenue climbed 15% to a record $479 billion, driven by a 17% increase in iPhone sales and a 24% jump in Mac sales. The company has also hinted that the upcoming holiday quarter could become its “best revenue quarter ever,” fueled by the debut of the iPhone Duo, its first foldable handset.
New Mac lineup: M6 chips, OLED touchscreen and AI focus
On November 6, Apple released the next generation of its Mac portfolio. The centerpiece is a 14-inch MacBook Pro powered by the M6 chip, featuring a 12-core CPU, 12-core GPU, and dual 16-core Neural Engines. Apple claims up to 30% faster graphics, 25% better AI performance, and up to 24 hours of battery life compared with the prior generation. Priced at 15,999 yuan in China, this model targets developers, students, and small-to-medium creators.
A premium variant introduces Apple’s first OLED touchscreen on a MacBook Pro, equipped with a PROLED XDR display, 120 Hz variable refresh, and peaks of 2,000 nits. The 14-inch and 16-inch versions run on M5 Pro or M5 Max silicon, aimed at demanding workloads such as video editing, 3D modeling, and on-device artificial-intelligence tasks. By offloading AI inference to the local Neural Engine, Apple hopes to reduce reliance on cloud compute and differentiate macOS from Windows-based PCs.
Mac revenue reached $37.9 billion in fiscal 2026, up from $33.7 billion a year earlier, indicating a growing share of high-end devices in Apple’s overall hardware mix. If the new models sustain this trajectory, they could lift average selling prices and improve the overall hardware profitability profile.
Technical outlook: price levels, risks and upside scenarios
On the market side, Apple’s shares touched an intraday high of $355.38 before settling at $344.17, encountering profit-taking resistance near the 0.786 Fibonacci retracement ($355.25). The stock currently sits just above its 20-day moving average ($343.10) and the 0.618 retracement level ($343.40), while remaining well over the 60-day moving average of $331.18, suggesting the medium-term trend stays bullish.
However, pre-market activity slipped to $339.85, positioning the $343-$344 band as a short-term battleground. A failure to defend this zone could expose the $335 support level, and a deeper break might test the $331-$327 range. The Relative Strength Index stands at 53, modestly below its signal line of 57, hinting that momentum is cooling but not yet in oversold territory.
Investors are essentially weighing two narratives: a bullish case where strong Mac sales, especially the OLED touchscreen models, exceed expectations and push the stock above $355-$356 on heavy volume, potentially targeting the 1.0 Fibonacci level near $370.34; and a bearish scenario where services growth misses the 8%-9% guide, memory-chip price pressures squeeze iPhone margins, and the China launch underperforms, dragging the price toward $331 or even $316.
Given the forward P/E of about 38×, the market has priced in robust growth. The upcoming earnings release—Apple’s first under new CEO John Ternus—will be critical. Clear guidance on managing memory costs and a solid outlook for the iPhone 18, combined with evidence that the new Macs are driving higher average selling prices, will be the decisive factors that determine whether the stock stays on its elevated path or reverts toward consensus targets around $332.
