Here's Why Apple Is My Second Biggest Holding Going Into 2026

Core Viewpoint - Apple stock has faced challenges in 2025 but shows potential for recovery and growth in 2026, driven by strong iPhone sales and a robust services business [1][2]. Financial Performance - Fiscal 2025 revenue increased by approximately 6% year over year to about $416 billion, up from $391 billion in fiscal 2024, marking a significant turnaround after years of declining sales [3]. - Earnings per share (EPS) for fiscal 2025 rose by 23% year over year, indicating strong bottom-line growth [4]. Future Guidance - Management anticipates total revenue growth of roughly 10% to 12% for the first quarter of fiscal 2026, supported by double-digit growth in both iPhone and services revenue [5]. - The services business experienced a growth rate of 13.5% in fiscal 2025, which is expected to continue [5]. AI as a Catalyst - Apple's investments in AI, including an overhaul of Siri, are expected to enhance device upgrades and deepen engagement with its large installed base of over 2.35 billion active devices [6][7]. - AI is projected to strengthen the services business and accelerate device sales, providing new monetization opportunities [8]. Capital Expenditure Strategy - Apple maintained disciplined spending with capital expenditures of $12.7 billion in fiscal 2025, contrasting sharply with other tech giants investing heavily in AI infrastructure [9][10]. - This conservative approach to spending positions Apple favorably against competitors that are significantly increasing their capital expenditures [10].