Apple(US:AAPL) Hua Er Jie Jian Wen·2026-01-21 08:19Core Viewpoint - Despite a 5% drop in Apple's stock price in early 2026 due to commodity cost inflation and concerns over the App Store, Goldman Sachs views this as a buying opportunity, maintaining a "buy" rating with a target price of $320, emphasizing Apple's strong pricing power and resilient service business [1]. Group 1: iPhone Revenue and Product Pipeline - Goldman Sachs is optimistic about Apple's upcoming F1Q26 earnings report, predicting revenue of $137.4 billion, a year-over-year increase of 11%, with iPhone revenue expected to reach $78 billion, reflecting a 13% growth [3]. - The growth in iPhone revenue is driven by a 5% increase in unit sales, with a remarkable 26% increase in shipments to China, and an 8% rise in average selling price (ASP) [3]. - The demand for the iPhone 17 series is outperforming previous models, and future product launches, including the anticipated foldable iPhone (iPhone Fold) in fall 2026 and iPhone 18 and iPhone Air 2 in spring 2027, are expected to sustain this growth momentum [3]. Group 2: Cost Pressures and Profitability - The market's primary concern is the impact of storage cost inflation on Apple's profit margins, with DRAM and NAND prices surging due to global supply shortages, leading to a cost increase for 12GB LPDDR5X RAM chips from $30 to $70 [5]. - In a worst-case scenario, if storage costs rise by 120%-140%, Apple's product gross margin could decline by 8-10 percentage points, with overall gross margin dropping by 6-7 percentage points [5]. - However, Goldman Sachs emphasizes that this is a theoretical risk, as Apple has strong defensive capabilities due to its large purchasing scale and long-term supply agreements, allowing it to manage cost pressures effectively [6]. Group 3: Services Business Growth - Despite a slowdown in App Store revenue growth to an expected 7% in F1Q26, Goldman Sachs forecasts a 14% year-over-year increase in Apple's services revenue, reaching $30 billion, driven by strong performance in other categories such as iCloud+, AppleCare+, and subscription services [7]. - Concerns regarding the App Store primarily focus on third-party payment diversions and macroeconomic impacts, but Goldman Sachs believes that the increasing demand for data storage driven by AI functionalities will support iCloud+ growth, while rising subscription prices for Apple TV+ will bolster revenue [7]. Group 4: Valuation and Earnings Outlook - From a valuation perspective, Apple's expected price-to-earnings (P/E) ratio is around 30 times, which Goldman Sachs believes is justified by its stable earnings growth [8]. - For F1Q26, Goldman Sachs predicts earnings per share (EPS) of $2.66, in line with market consensus, with a gross margin forecast of 47.7%, accounting for approximately $1.4 billion in tariff-related costs [8]. - Looking ahead to F2Q26, revenue is expected to reach $104.4 billion, with gross margin improving to 49.1%, supported by the continued popularity of the iPhone 17 series and the scale effects of the services business [8].