JPMorgan Raises Apple Target as Valuation and Earnings Setup Improve

Core Viewpoint - JPMorgan raised its price target on Apple to $315 from $305 while maintaining an Overweight rating, indicating an improving risk-reward profile ahead of upcoming earnings [1] Group 1: Stock Performance and Market Context - Apple shares underperformed the S&P 500 over the prior two months, falling 13% compared to a 1% gain for the broader index, reflecting investor concerns about gross margin pressure and potential price elasticity risks for iPhone demand [2] - Despite the underperformance, positive indicators suggest strong demand for the iPhone 17 [2] Group 2: Earnings Expectations - JPMorgan anticipates a constructive setup heading into Apple's fiscal first-quarter 2026 results, with the stock trading at approximately 30 times next-twelve-month earnings, below historical peaks observed during major iPhone product cycles [3] - iPhone revenue is expected to exceed consensus forecasts, with projected 16% year-over-year growth, marking the strongest iPhone revenue expansion since September 2021 [4] Group 3: Services and Margin Outlook - For Services, JPMorgan projects App Store revenue growth of about 7% year-over-year in fiscal Q1, below Apple's overall Services growth guidance of roughly 14%, but notes that Apple has multiple non-App Store levers to support Services growth [4] - Limited margin pressure from higher memory costs is anticipated due to Apple's long-term supply contracts and scale advantages, which typically provide more favorable component pricing [5] Group 4: Revenue and Earnings Forecast - JPMorgan forecasts a modest revenue beat and a stronger earnings beat in fiscal Q1, with a fiscal Q2 outlook calling for 10%–12% revenue growth [6] - The higher price target reflects increased earnings power and a valuation multiple more consistent with historical peaks ahead of major product cycles later in the year [6]