Tesla Needs Bridges, but Elon Musk Refuses to Build Them (Inside Orchard)
Earlier this week, Tesla released quarterly earnings. Instead of any specific number grabbing headlines, there was one line from Elon Musk on the Tesla earnings call that made waves. Tesla will be discontinuing both the Model S and Model X. The Model S put Tesla on the map prior to the Model 3, offering the longest range out of any Tesla vehicle. The Model X has been Tesla’s genuine SUV offering. The move is the latest in a string of strategy decisions that is causing the Tesla community to scratch their collective head. We have another example of Musk taking unnecessarily risky steps to chase a future that he’s painting as big, bold, and essential.
Tesla finds itself in a multi-year downtrend. Beginning in late 2022 with higher interest rates coming out of the pandemic, Tesla began to see notable weakness in demand for its vehicles. The situation then took a turn for the worse with Musk’s decision to wage a brutal price war with the competition. My thinking continues to be that the decision led to well-liked Tesla CFO Zach Kirkhorn to quit suddenly. It’s never a good thing when a public company CFO quits suddenly. The bottom then dropped when Musk decided to go full-blown into politics in the summer of 2024. Musk’s words and actions weren’t just turning off a good portion of his current customer base. They were dramatically limiting the pool of Tesla’s next marginal customer. Declining sales growth in deliveries eventually turned to actual declines in deliveries. Tesla saw its first full-year revenue decline in 2025 with total revenue just 17% higher than the total seen in 2022. Musk is now focused on changing the Tesla story away from car sales and to autonomous fleets and humanoids.
Musk’s latest decision is to discontinue Tesla’s most premium vehicles. The stated rationale is that Tesla will convert vehicle production space that had gone to the Model S and Model X at the Fremont factory to an Optimus factory. The decision is a
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Apple Reaccelerates Share Buyback, Apple’s Stellar Free Cash Flow, Takeaways From Apple’s 1Q26 10-Q
We will continue our Apple 1Q26 earnings review by turning to Apple’s capital management, balance sheet, and 10-Q.
For those of you who are new to the Above Avalon Daily newsletter, our goal for each Apple earnings review is to not leave any financial stone unturned. After today’s email, there will likely be one additional update dedicated to reviewing Apple earnings before moving on to other topics.
Let’s jump right in.
Apple Reaccelerates Share Buyback
We have new data for Apple’s share buyback activity. The following totals are for Apple's share repurchases via open market transactions over the past two years:
1Q24: $20.5B spent on buyback. Average repurchase price per share: $183.77.
2Q24: $23.5B. Average repurchase price per share: $180.37.
3Q24: $26.0B. Average repurchase price per share: $187.36.
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Apple 1Q26 Earnings Review: Margin Concerns Are Overblown
Happy Wednesday.
To recap where we stand with reviewing Apple's 1Q26 earnings.
Last Friday: Big picture overview and the numbers
Tuesday: All about iPhone
Today: Margins
Let's jump in.
Apple 1Q26 Earnings Review: Margin Concerns Are Overblown
Heading into Apple’s 1Q26 earnings release, margin concerns were among the list of items thought to be contributing to Wall Street’s negative view regarding Apple. Memory pricing inflation had been in the news for weeks. There was also growing chatter and speculation surrounding the Apple / TSMC relationship as it pertained to future pricing and supply. We could have even thrown in lingering tariff cost concerns into the margins discussion, although the tariff topic does seem to have genuinely been put on the back burner for now with Apple’s exposure being contained.
Based on Apple management’s commentary on the 1Q26 earnings call, gross margin fears are overblown based on how events on the ground are trending. While Apple will likely see some pressure from select higher component pricing, a handful of tailwinds are positioned to help offset those headwinds.
Memory accounts for a relatively small percentage
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Apple 1Q26 Earnings Review: Let’s Talk About iPhone Results
Happy Tuesday. We are going to continue our Apple 1Q26 earnings review. Today’s update took a bit longer than expected to finalize.
Last Friday, we went over my initial thoughts regarding Apple’s results and how the numbers compared to my estimates. 1Q26 earnings and 2Q26 guidance were very strong. For this week, we will take a closer look at specific earnings-related topics. Today’s update will be focused on the iPhone.
Apple 1Q26 Earnings Review: Let’s Talk About the iPhone
Based on Apple’s earnings releases and conference call with analysts, here’s what we know about the latest iPhone results:
iPhone revenue: $85.3B (up 23%).
The $85.3B of revenue was constrained a bit by supply (advanced node 3nm capacity for SoCs). This supply shortage materialized via “very lean channel inventory” as management could not put as many iPhones into the channel as they wanted.
Apple said they sold a record number of iPhones in China in 1Q26 (Greater China revenue was up 38%). Records were put in for number of upgraders and strong double-digit growth on switchers. Recall how Apple’s 4Q25 iPhone results were hit by iPhone shortages in China.
As shown in the exhibit below, Apple is experiencing a step-up in iPhone revenue from approximately $200B/year to
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Meta Pulling Back From VR Was Inevitable (Inside Orchard)
Last month, Meta announced it was laying off 10% of employees in its Reality Labs division, which is home to the company’s VR/AR/MR/HW pursuits. The layoffs were aimed at VR: Quest headsets, Horizon Worlds / metaverse experiences, and first-party VR game studios. Not surprisingly, the news did not go over well within the VR community, which framed the layoffs as a doomsday scenario for the VR industry. When it came to a VR pullback, the writing had been on the wall for some time. Although expected, the pullback still provides some interesting observations as to where Meta stands when it comes to Reality Labs.
We knew that Meta was struggling with Quest sales. The company discloses Reality Labs revenue in its quarterly financials. Between 2022 and 2025, Reality Labs annual revenue has fallen by approximately 15%. The data pointed to Quest headsets not selling well in addition to overall weakness across Meta’s VR ecosystem. For a company that has sold approximately 20 million Quest VR headsets to date (a helpful data point for determining the ceiling for the Quest installed base), it was far too early on the adoption curve to be registering flat Quest headset revenue. For context, while Apple Watch revenue has been tending flat for the past four years, the installed base is 225 million people. With Quest, new user growth should still be strong enough to offset any headwind associated with declining sales to existing users.
In describing the Quest business, gaming and young people come to mind. Meta bought into this trend by investing in its own gaming studios to ensure more (gaming) content was available for the devices. The hope was
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You’re Our New Design Liaison (AVALON Podcast)
In the 33rd episode of the AVALON podcast, Neil discussed the following topics/subjects:
What's on the Agenda (the bulk of the discussion modeled after Apple’s Monday morning meetings)
John Ternus tapped to lead Apple’s Design team. Related questions that are discussed: Why does Apple rely on design liaisons? Who is in Tim Cook’s inner circle?
Meta pulling back from VR. Should Apple look to entice parts of the VR community with mass market dreams that go beyond niche VR gaming?
Lighting Round (two topics two minutes each)
Apple AI pin rumors.
Wall Street is on edge ahead of Apple’s 1Q26 earnings.
Give Me a Break (something ridiculous that jumped out at me)
“Skyscraper Live” on Netflix.
Tell Me More (something intriguing that has my attention)
Who can actually go up against YouTube?
Become a subscriber to listen to the 64-minute episode.
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Apple 1Q26 Earnings Review: People Want What Apple Is Selling
Hello everyone.
Welcome to a special Friday edition of the Above Avalon Daily. It’s been a busy week. For today’s update, I wanted to share the big picture takeaway from Apple’s earnings and how results compared to my estimates. There is plenty more to discuss. We will do that next week.
Have a great weekend.
Apple 1Q26 Earnings Review: People Want What Apple Is Selling
The theme to our Apple 1Q26 earnings preview was divergence. Wall Street had turned skeptical of Apple just as the company’s business fundamentals were entering a higher gear. Apple’s 1Q26 results validated that theme. Apple reported its best quarter in four years. To then have Apple’s very strong 1Q26 results be constrained by supply tells us that demand is improving even faster than what is implied by the numbers. While the iPhone deservedly is getting much of the attention – revenue up 23% - the entire Apple ecosystem is seeing improved demand. People want what Apple is selling.
We have spent the past 18 to 24 months talking about how Apple product demand was beginning
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Meta 4Q25 Earnings Results: Impressive Growth, but at What Cost?
Happy Thursday. Apple’s FY1Q26 earnings are out. Both 1Q26 results and 2Q26 guidance were strong. We will talk about it tomorrow (Friday).
For today’s update, we will continue our earnings reviews with Meta.
Let’s jump right in.
Meta 4Q25 Earnings Results: Impressive Growth, but at What Cost?
For the past few quarters, a financial narrative battle has surrounded Meta. Following the company’s 4Q25 earnings release, this battle remains front and center.
One side thinks the Meta story should be primarily focused on revenue growth. Along those lines, there is a compelling story to tell.
Meta’s 4Q25 revenue was up 24% to $59.9B.
Meta’s 4Q25 ad impressions were up 18%.
Daily active users was up 7% to 3.58B.
Billions of users are spending more time on a Meta property consuming video clips, text posts, articles, and advertising.
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Previewing Apple’s 1Q26 Earnings: My Estimates, Above Avalon Expectation Meters (1Q26 Edition)
Hello everyone. Today’s update will conclude our Apple 1Q26 earnings preview. Apple reports earnings on Thursday at 4:30 pm ET.
Let’s jump in.
Previewing Apple’s 1Q26 Earnings: My Estimates
The overall theme to my Apple FY1Q26 estimates: improving fundamentals. Most financial line items are trending better in FY2026 compared to FY2025. There are a few exceptions which we will discuss in a few minutes.
Apple will report the following records on Thursday:
Revenue (quarterly)
Operating income (quarterly)
Net income (quarterly)
iPhone revenue (quarterly)
Services quarterly revenue
Services gross margin
Here are my expectations for Apple’s key 1Q26 metrics:
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Previewing Apple’s 1Q26 Earnings: Wall Street Is on Edge
Hello everyone.
Monday doubled as snowstorm cleanup day here in Connecticut. We received a little bit north of 16 inches, the most in about a decade. It certainly felt more during cleanup.
For today’s update, we will begin previewing Apple’s 1Q26 earnings which will be released on Thursday. The discussion will roll into tomorrow's update as well.
Previewing Apple’s 1Q26 Earnings: Wall Street Is on Edge
We are witnessing one of the largest divergences heading into an Apple earnings release in recent memory.
The company’s business fundamentals continue to improve. The company is going to report an all-time quarterly record on a few fronts on Thursday. Thanks to strong device sales trends and robust Services performance, revenue growth is trending 3x stronger than what it was last year at this time.
Set against these improving trends, Wall Street’s attitude and feelings toward Apple has turned negative over the past two months.
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Everyone Seems to Be Forgetting About Apple Maps (AVALON Podcast)
In the 32nd episode of the AVALON podcast, Neil discussed the following topics/subjects:
What's on the Agenda (the bulk of the discussion modeled after Apple’s Monday morning meetings)
Addressing odd criticisms and the overall lack of “takes” regarding LA Lakers in Apple Immersive Video, and why Apple Vision Pro offers something different than just the feeling of attending live events in person.
How and why Apple Maps history helps frame the Apple/Google partnership regarding Gemini models.
Why Goldman was willing to lose money on Apple Card, and why Apple doesn't launch a credit card on its own.
Lighting Round (two topics two minutes each)
Ads coming to ChatGPT
Apple gives Apple Services the New Year treatment with some fresh financial disclosures.
Give Me a Break (something ridiculous that jumped out at me)
X chasing long-from content via their Articles feature.
Tell Me More (something intriguing that has my attention)
A brick and mortar resurgence that bodes well for Apple Maps and Apple’s advertising business.
Become a subscriber to listen to the 82-minute episode. Already an AVALON subscriber? The episode “Everyone Seems to Be Forgetting About Apple Maps” is in your podcast player.
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If you currently subscribe to the Above Avalon Daily newsletter (great choice), with the Podcasts Package attached to your subscription, you get the AVALON podcast for FREE. This is one of the best deals available in the Above Avalon ecosystem.
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Let’s Talk About This Apple AI Pin Rumor
Today's Above Avalon Daily update includes the following story:
Let’s Talk About This Apple AI Pin Rumor
Today’s update is dedicated to talking about The Information’s article regarding Apple working on an AI wearable pin. There may be some funny business at play. Let’s discuss.
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Netflix 4Q25 Earnings, Netflix Is Misreading the Market, The Warner Bros. Discovery Deal
Today's Above Avalon Daily update includes the following stories:
Netflix 4Q25 Earnings
Netflix Is Misreading the Market
The Warner Bros. Discovery Deal
The 4Q25 earnings season has begun for us. We will kick things off by analyzing Netflix’s 4Q25 earnings and earnings interview. The discussion then turns to how Netflix is misreading the market. We conclude with Neil’s thoughts on where the Warner Bros. Discovery deal stands.
An Above Avalon Daily subscription is required to read this daily update. Subscribers can read the update here.
An audio version of this update is available to members who have the podcast add-on attached to their membership.
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Exclusive Analysis. Receive the Above Avalon Daily newsletter, widely-recognized as the leading daily newsletter dedicated to Apple. Now in its tenth year.
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Ads Coming to ChatGPT, OpenAI’s Strategy, Apple Implications
Today's Above Avalon Daily update includes the following stories:
Ads Coming to ChatGPT
OpenAI’s Strategy
Apple Implications
The update is dedicated to going over Neil’s thoughts on ads coming to ChatGPT. In particular, we analyze OpenAI’s strategy. Is OpenAI late or early with bringing ads to ChatGPT? Related implications that ads in ChatGPT raise for Apple are also discussed.
An Above Avalon Daily subscription is required to read this daily update. Subscribers can read the update here.
An audio version of this update is available to members who have the podcast add-on attached to their membership.
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Exclusive Analysis. Receive the Above Avalon Daily newsletter, widely-recognized as the leading daily newsletter dedicated to Apple. Now in its tenth year.
Archive Access. Access previous updates sent to members in an easy-to-navigate archive built in Ghost.
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So, How Much Did Your Seat Cost? (AVALON Podcast)
In the 31st episode of the AVALON podcast, Neil discussed the following topics/subjects:
What's on the Agenda (the bulk of the discussion modeled after Apple’s Monday morning meetings)
Neil's thoughts on LA Lakers in Apple Immersive Video.
Apple and Google officially announcing a partnership regarding Gemini models.
Chase to become the new issuer behind Apple Card.
Lighting Round (two topics two minutes each)
Apple unveils Apple Creator Studio
Apple Vision Pro Arcades?
Give Me a Break (something ridiculous that jumped out at me)
The NYT’s continued attempts to paint Apple in a negative light.
Tell Me More (something intriguing that has my attention)
Genuine storytellers, such as Adam the Woo, in a sea of AI slop.
Become a subscriber to listen to the 56-minute episode. Already an AVALON subscriber? The episode “So, How Much Did Your Seat Cost?” is in your podcast player.
Choose a monthly subscription or go with annual to save. (Charges can be expensed by your employer as the podcast is filled with analysis and research. If you need paid invoice receipts, go with the annual plan.)
Upon signup, you will receive a welcome email with directions for getting the podcast in your player. AVALON can be listened to in Apple Podcasts and various third-party podcast players including Pocket Casts, Overcast, and Castro.
If you currently subscribe to the Above Avalon Daily newsletter (great choice), with the Podcasts Package attached to your subscription, you get the AVALON podcast for FREE. This is one of the best deals available in the Above Avalon ecosystem.
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Barnes & Noble Has Become an Antidote to Amazon (Inside Orchard)
If someone said ten years ago that Barnes & Noble, the U.S. book seller, would experience a resurgence in the mid-2020s, few would believe the prediction. And yet, Barnes & Noble is doing just that by opening dozens of stores a year, defying consensus expectations of a there being a retail desert drained of water by Amazon.
Thanks to a multi-year expansion, the number of Barnes & Noble stores stands at approximately 700, close to the peak number seen in the late 2000s. As seen with the following new store openings trajectory, management is quite bullish about business prospects.
2023: 30 new stores
2024: 61 new stores
2025: 67 new stores
2026 (expected): 60 new stores
It’s a remarkable turn of events for a retailer that closed 20% of its stores last decade. The growth isn’t a result of Barnes & Noble reverting to its former strategy. Instead, we are seeing a retailer that has undergone significant change.
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Apple Returns to Publishing Services Recap, Estimating App Store Revenue, Breaking Down Apple’s Services Revenue Growth
Today's Above Avalon Daily update includes the following stories:
Apple Returns to Publishing Services Recap
Estimating App Store Revenue
Breaking Down Apple’s Services Revenue Growth
In a welcome change, Apple used the first few weeks of a new calendar year to return to publishing a year-in-review for its Services business. We begin today’s update by going over Neil’s thoughts on Apple’s press release. The discussion then goes over Neil’s estimates for App Store revenue and the various revenue growth drivers responsible for Apple’s Services revenue growth.
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An audio version of this update is available to members who have the podcast add-on attached to their membership.
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Exclusive Analysis. Receive the Above Avalon Daily newsletter, widely-recognized as the leading daily newsletter dedicated to Apple. Now in its tenth year.
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Apple Unveils Apple Creator Studio, Apple’s Bet, Potential Risk Factors
Today's Above Avalon Daily update includes the following stories:
Apple Unveils Apple Creator Studio
Apple’s Bet
Potential Risk Factors
Hello everyone. Apple unveiled a new paid service that plays in the creative app vertical. Today’s update will be dedicated to discussing the new service. The discussion goes over Apple’s broader bet that is being placed with Apple Creator Studio.
An Above Avalon Daily subscription is required to read this daily update. Subscribers can read the update here.
An audio version of this update is available to members who have the podcast add-on attached to their membership.
Choose either a monthly or annual subscription. Payment is hosted by MoonClerk and secured by Stripe. Apple Pay and other mobile payment options are accepted. After signup, use this link to update your payment information and subscription status at any time.
Subscriber Privileges and Benefits
Exclusive Analysis. Receive the Above Avalon Daily newsletter, widely-recognized as the leading daily newsletter dedicated to Apple. Now in its tenth year.
Archive Access. Access previous updates sent to members in an easy-to-navigate archive built in Ghost.
Full Access to Above Avalon Forum. Access exclusive channels in the Above Avalon forum in Discord.
Email Access to Neil Cybart. Receive timely responses from Neil to email inquiries.
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Apple and Google Make Gemini Models Deal Official, Apple’s Optionality, Revisiting Apple’s (AI) Long Game
Today's Above Avalon Daily update includes the following stories:
Apple and Google Make Gemini Models Deal Official
Apple’s Optionality
Revisiting Apple’s (AI) Long Game
We kick things off with Neil’s thoughts on Apple and Google announcing a deal regarding Apple Foundation models being based on Gemini models. The discussion then turns to how the deal provides Apple optionality when thinking about longer-term implications. We conclude by going over Apple’s (AI) long game.
An Above Avalon Daily subscription is required to read this daily update. Subscribers can read the update here.
An audio version of this update is available to members who have the podcast add-on attached to their membership.
Choose either a monthly or annual subscription. Payment is hosted by MoonClerk and secured by Stripe. Apple Pay and other mobile payment options are accepted. After signup, use this link to update your payment information and subscription status at any time.
Subscriber Privileges and Benefits
Exclusive Analysis. Receive the Above Avalon Daily newsletter, widely-recognized as the leading daily newsletter dedicated to Apple. Now in its tenth year.
Archive Access. Access previous updates sent to members in an easy-to-navigate archive built in Ghost.
Full Access to Above Avalon Forum. Access exclusive channels in the Above Avalon forum in Discord.
Email Access to Neil Cybart. Receive timely responses from Neil to email inquiries.
Access Bundle Discounts. Customize a subscription with additional Above Avalon products and save: AVALON, Podcasts Packages, Inside Orchard, and Financial Models.
Above Avalon Support. Play an active role in supporting Above Avalon as an independent voice and resource. Above Avalon is 100% funded by subscribers.
My Impressions Watching LA Lakers in Apple Immersive Video
Today's Above Avalon Daily update includes the following story:
My Impressions Watching LA Lakers in Apple Immersive Video
Last Friday, the first LA Lakers game in Apple Immersive Video aired. A full replay is available to most Apple Vision Pro owners for free (via the NBA app). Today’s update will go over my impressions watching the game. We will continue the discussion tomorrow.
An Above Avalon Daily subscription is required to read this daily update. Subscribers can read the update here.
An audio version of this update is available to members who have the podcast add-on attached to their membership.
Choose either a monthly or annual subscription. Payment is hosted by MoonClerk and secured by Stripe. Apple Pay and other mobile payment options are accepted. After signup, use this link to update your payment information and subscription status at any time.
Subscriber Privileges and Benefits
Exclusive Analysis. Receive the Above Avalon Daily newsletter, widely-recognized as the leading daily newsletter dedicated to Apple. Now in its tenth year.
Archive Access. Access previous updates sent to members in an easy-to-navigate archive built in Ghost.
Full Access to Above Avalon Forum. Access exclusive channels in the Above Avalon forum in Discord.
Email Access to Neil Cybart. Receive timely responses from Neil to email inquiries.
Access Bundle Discounts. Customize a subscription with additional Above Avalon products and save: AVALON, Podcasts Packages, Inside Orchard, and Financial Models.
Above Avalon Support. Play an active role in supporting Above Avalon as an independent voice and resource. Above Avalon is 100% funded by subscribers.