Hello everyone.
Today’s update will be dedicated to reviewing Apple’s earnings. We will continue this discussion tomorrow.
This earnings release required a more than usual number of earnings model adjustments. My earnings model with updated numbers has been uploaded to the Digital Package Tab within the Above Avalon payer portalfor members with the Financial Modeling add-on attached to their membership.
Let’s jump in.
Reviewing Apple 4Q26 Earnings: Look Through the Noise to See Market Share Gains
The takeaway from our Apple earnings preview was that angst and jitteriness were in the air. Big Tech earnings season spooked some people which likely led to a cap being placed on expectations facing Apple. This lowered the bar that Apple had to get over to beat or meet expectations.
Apple’s 4Q26 results were good, at the high end of management’s guidance, with iPhone and Mac results especially strong. Apple’s 1Q27 guidance, which beat consensus but missed my expectations, contained some noise.
As is the case for every company selling consumer gadgets, the memory crisis represents a growing headache for Apple. While management has been managing the situation as best as it can, including using its balance sheet to lock up memory supply, additional product price hikes driven by higher memory costs can’t be ruled out. The difference between Apple and its consumer gadget peers is that Apple has pricing power. This will allow Apple to hold on to most of its gross margin gains that materialized over the past few years while also grabbing market share against competitors struggling to navigate the memory crisis.
Here are Apple’s 4Q26 results and 1Q27 guidance versus my expectations:
Revenue: $114.5B (vs. my $113.8B estimate). The $0.7B delta (0.6%) to my estimate was driven primarily by stronger iPhone revenue. iPad and wearables / home / accessories revenue came in below expectations.
Adjusted EPS (earnings per share): $2.04 (vs. my $1.97). Excluding a penny of EPS associated
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