Schwab Network on $AAPL (Nov 3, 2026)
AAPL fell more than 3% despite beating EPS and revenue, as expectations were very high after a 24% run. Deteriorating product gross margins, likely from higher memory costs tied to the new Siri AI, remain a major near-term issue. Revenue rose roughly 12% to $114.5 billion but growth slowed from 16%; iPhone grew 17%. At 36 to 37 times forward earnings with price targets being cut, the speaker questions how much further it can fall, though free cash flow and a strong balance sheet make it a safe haven in rotational trades.
Jump to any passage
We certainly have some profits that interest you with Apple and Palantir.
Well, if we see a sharp reversal in the technology sector, beware. We have a little pre-market buying, but Apple is under pressure despite its better-than-expected results. Yes, Diane, we talked about this yesterday.
Apple's stock fell yesterday ahead of the report, but it remained up about 24% before the earnings event, and as we talked, they had to meet all the expectations, but they didn't.
This probably explains why you saw this decline of more than 3% in stocks today, because the ceiling of expectations was very high.
Those forward-looking valuations are 36 to 37 times earnings for the next 12 months, and then you come out and say: "We have exceeded earnings per share, we have exceeded revenue, but the deterioration of gross margins for products remains a major near-term issue, and this is probably due to the higher memory costs related to the new AI digital assistant, Siri."
Total revenues increased by approximately 12% to reach $114.5 billion. That was higher than expected, but sales growth actually slowed from a 16% growth rate in the previous quarter.
So, this was a weakness in the iPad's performance, and China and its wearable devices business were disappointing. Once again, the iPhone was the standout item. A continuous super cycle. iPhone revenue grew 17% to a record $57.6 billion for the September quarter, exceeding the $56.5 billion they had expected.
Good numbers, but we've talked about this. You should achieve everything when your rating is this high. This stock was outperforming. Now, will it continue moving downwards?
Well, it has been used as a safe haven in rotational trades recently, simply because of its free cash flow, strong balance sheet, and minimal impact of capital expenditures compared to other technology companies.
So, you need to take that into account. We are seeing some pullbacks in terms of price targets, but at the same time, if this stock continues as an alternative to safe-haven trades, how much of a potential fall is possible even though valuations are so high?
When you start talking about the margins, when will things improve? When will memory chip prices decrease? Perhaps not soon.
Watchpoints
What this channel has said about $AAPL
Schwab Network has 50 calls on this stock; only the adjacent ones are shown.