Apple 3Q26 Earnings Review: A Capital Efficiency Story

Today's Above Avalon Daily update includes the following story:  

• Apple 3Q26 Earnings Review: A Capital Efficiency Story

On Monday, we talked about Apple’s revenue outlook heading into FY27. iPhone upgrading dynamics will play a big role in what continues to look like a good setup heading into next year.

Yesterday, we discussed Apple’s margin outlook. Compared to revenue, Apple’s margin picture faces greater pressure. FX, supply constraints, and memory will weigh on gross margins in FY27. Instead of FY27 representing the beginning of a structural decline in margins, my thinking is Apple sees something of an air pocket since FY26 was a very good year for gross margins.

For today’s update, we will focus on an Apple financial topic that probably still doesn’t get as much attention as it deserves: Apple’s capital picture, including balance sheet management. Following Apple’s 3Q26 results, there are some new takeaways to discuss.

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