• 4Q25 PATMI was within our expectations, while revenue underperformed slightly due to supply constraints in iPhone 16 and 17. FY25 revenue/PATMI were at 98%/100% of our FY25e forecasts. Revenue grew 8% YoY, mainly driven by growth in iPhone (+6% YoY) and Services (+15% YoY).
• China revenue fell 4% YoY. Management remains positive, expecting the China market to return to growth in 1Q26e, with overall revenue projected to rise 10–12% YoY (the fastest pace in four years), supported by double-digit iPhone sales growth.
• We raise our FY26e revenue and PATMI assumption by 1% and 5% respectively, to account for the higher-than-expected growth in iPhone. We roll over another year of valuations and maintain our recommendation of REDUCE, with a raised DCF target price of US$230 (prev. US$200). WACC of 6.5% and a terminal growth rate of 3% remain unchanged. Apple’s AI rollout thus far has been disappointing, with no game-changing AI to trigger a major product upgrade cycle. We continue to remain cautious.

• Upgrades include the new A19 Pro chip, C1X 5G modem, N1 networking chip, enhanced cameras, and tougher Ceramic Shield 2.
• Apple also introduced AirPods with on-device AI features, including real-time language translation and voice isolation, as well as the Apple Watch Series 11 with improved health tracking and a thinner design.
• Apple is absorbing the tariff impact by keeping prices unchanged or slightly lower (for same-series, same-storage iPhones), which adds pressure on margins.
• Our valuations remain unchanged. Our DCF target price remains unchanged at US$200, with a WACC of 6.5% and a terminal growth rate of 3%. We downgrade our recommendation from NEUTRAL to REDUCE due to the recent share price rally. We maintain a cautious outlook on Apple, due to near-term headwinds from tariffs, elevated CAPEX, and no significant AI innovation to help with persistent weakness in products and the China market.

• 3Q25 results were within our expectations. 9M25 revenue/PATMI were at 75%/76% of our FY25e forecasts. Revenue grew 10% YoY, mainly driven by growth in iPhone (+14% YoY) and Services (+13% YoY).
• China market +4.4% YoY, first positive in the past eight quarters, driven by accelerated iPhone sales supported by Chinese government subsidies. Management expects a tariff cost of US$1.1bn in 4Q25e
• We keep our FY25e revenue and PATMI assumption unchanged. We maintain our recommendation of NEUTRAL, with the same DCF target price of US$200. WACC of 6.5% and a terminal growth rate of 3% remain unchanged. We maintain a cautious outlook on AAPL, as near-term tariff headwinds continue to weigh on margins. iPhone sales and the strength of the China market are also unlikely to last.

• Upgrades centered primarily on visual enhancements such as the new “Liquid Glass” design, along with minor software refinements
• Few AI innovations were announced (AI translator, LLM accessibility to third-party developers, and Visual Intelligence), most of which trail behind rivals like Google, not enough to address growing competitive pressures.
• Our valuations remain unchanged. We maintain our NEUTRAL recommendation with an unchanged DCF target price of US$200. WACC of 6.5% and a terminal growth rate of 3% remain unchanged. We maintain a cautious outlook on Apple, due to near-term headwinds from tariffs, elevated CAPEX, and no significant AI innovation to help with persistent weakness in products and the China market.

• 2Q25 results were within our expectations. 1H25 revenue/PATMI were at 51%/54% of our FY25e forecasts. Revenue grew 5% YoY, mainly driven by growth in Services (+12% YoY), and gross margin expanded 0.5% YoY.
• iPhone sales +1.9% YoY, with regional strength offset by continued weakness in China (-2.3% YoY).
• We lower our FY25e and FY26e PATMI estimates by 2% and 4%, respectively, to account for the lower gross margin due to rising tariffs. We adjusted FY25e and FY26e’s CAPEX by 1.2x and 2.3x to account for the higher investment in US operations. We maintain our recommendation of NEUTRAL, with a lowered DCF target price of US$200 (previously US$235). WACC of 6.5% and a terminal growth rate of 3% remain unchanged. We maintain a cautious outlook on Apple, due to near-term headwinds from tariffs, elevated CAPEX, and persistent weakness in products and the China market.

·1Q25 results were within our expectations. 1Q25 revenue/PATMI were at 29%/32% of our FY25e forecasts. Revenue grew 4% YoY, mainly driven by growth in Services (+14% YoY) and gross margin expanded 1% YoY. 

· iPhone sales dropped 0.8% YoY, with regional strength offset by continued weakness in the China market (-11.0% YoY). 

· Our FY25e forecast remains unchanged. Our DCF target price remains at US$235, with a WACC of 6.5% and a terminal growth rate of 3%. Due to recent price performance, we downgrade our recommendation from ACCUMULATE to NEUTRAL. iPhone sales have not yet seen a spike, due to the very gradual and limited rollout of the regions and features. We expect it to be backloaded in 2H25 and FY26, especially after more regions and features are made available.

·   4Q24 revenue was within our expectations, while PATMI missed due to a one-time income tax expense of US$10.2bn to the Irish government. FY24 revenue/PATMI were at 97%/92% of our FY24e forecasts. iPhone growth of 6% YoY and Services growth of 12% YoY were the standout. 

·   The iPhone 16 series is benefiting from growing interest in Apple Intelligence, which began a gradual rollout this Oct. Sales increased across all regions except China, where local competition continues to weigh on performance. iPad/Mac/Wearables remain muted, with ongoing weakness expected into 1Q25e.

·    Our FY25e forecast remains unchanged. We roll over another year of valuations and upgrade our recommendation from NEUTRAL to ACCUMULATE with a raised DCF target price of US$235 (prev. US$215), with a WACC of 6.5% and a terminal growth rate of 3%. The gradual rollout of Apple Intelligence may take time, but we are confident it will positively impact the iPhone replacement cycle in FY25 and FY26.

• 9M24 revenue/PATMI was in line with expectations at 73%/77% of our FY24e forecasts. 3Q24 revenue growth of 5% YoY is led by strong services business (14% YoY)

• We expect a soft 4Q24 for AAPL due to ongoing weak iPhone sales in China and slower-than-expected global iPhone refresh cycles. However, a significant iPhone refresh super cycle is expected in FY25.

• We maintain a NEUTRAL rating. We decrease our target price to US$215 (prev. US$220.00), with a WACC of 6.5% and a terminal growth rate of 3%. We raised service margin by 2% to account for the margin improvement and cut FY24e iPhone unit estimates/revenue/PATMI by 4%/4%/2% to account for the delay in iPhone super cycle.

Apple held its annual Worldwide Developers Conference on June 10, where the company introduced Apple Intelligence, its AI framework that supports a range of new features that can be integrated across apps to perform tasks. It also unveiled updates to iOS 18, iPadOS 18, WatchOS 11, and MacOS 15 (Sequoia).

• The new features in Apple Intelligence include major AI-centric upgrades on Siri, AIpowered writing tools, custom AI-generated "Genmoji," and direct access to OpenAI's chatbot.
• The OS updates include user-centric enhancements that focus on personalization, security, writing tools, calculation, and device synchronization.
• We believe the newly announced features will likely trigger a new round of replacement cycle, as Apple Intelligence is only compatible with the iPhone 15 Pro/Pro Max and iPads and MacBooks with M series chips. Additionally, improved device synchronization is expected to further increase product demand, as people are more motivated to get a MacBook to pair with their iPhone (or an iPhone to pair with their MacBook) to enjoy the synchronization benefits.
• We downgrade to a NEUTRAL rating (from ACCUMULATE) after considering recent share price movements. We increase our target price to US$220 (prev. US$194.00), a WACC of 6.5%, and a terminal growth rate of 3%. We raise our iPhone unit estimates by 8%, and increased FY24e revenue/PATMI estimates by 5%/3% to account for higher upgrade demand for products.

Apple Intelligence

AI-centric upgrade on Siri. Siri is becoming smarter, more natural, relevant, and personal. Updates include: (1) responding to conversational language, (2) ability to cross-reference
information and perform actions across apps (for example, it can extract the event time from an invitation, cross-reference it with your calendar, and use maps to determine if you can
arrive on time), (3) summarize text in mail and other apps, AI writing tools that helps to rewrite & adjust tone of writing and (4) prioritized notifications that surface the ones that requires immediate attention

Image Creation features. Generative AI has been introduced in image generation, offering features such as (1) new Genmoji for creating customized emojis, (2) Image Playground for
generating new images across various apps, (3) advanced search capabilities for videos and photo libraries, and (4) new photo editing tools, including the Clean Up tool.

• 2Q24 results were within our expectations. 1H24 revenue/PATMI was at 52.2%/56.8% of our FY24e forecasts. Revenue declined by 4% due to a 10.5% YoY drop in iPhone sales. AAPL unveil record $110 billion buyback.
• AAPL's AI trajectory remains uncertain as the company refrained from disclosing additional details. Their disclosures on the forthcoming "Let Loose" iPad event (May 7th) and the Worldwide Developers Conference (June 10th) will shape the company's short—and long-term outlook.
• We upgraded to an ACCUMULATE rating from NEUTRAL due to share price losses. Our target price remains unchanged at US$194, with a WACC of 6.5% and a terminal growth rate of 3%. There is no change in the forecast.

The Positives

+  Strong gross margin delivery. AAPL’s 2Q24 gross margins of 46.6% (+2.3% YoY), beat its guided 45-46% range, despite a decline in revenue. The margin expansion is driven by 1) a higher mix of Services (e.g., Google payment, with practically 100% gross margin) and 2) a higher mix of Products (customers preferring premium models). Product margin declined by 10bps, mainly due to the decrease in iPhone revenue.

The Negatives

-  Weakness persists in revenue performance. AAPL reported revenue of US$90.8 bn, marking a 4.3% YoY decline, reflecting persistently low demand for its products. iPhone sales have declined for the second consecutive quarter, dropping by 10.5% YoY. This decline is primarily attributed to weak performance in the Chinese market, with a decrease of 8.1% YoY, influenced by China's slowing economy and increased competition from local rivals like Huawei. Although the decline was less than expected, AAPL's revenue performance overall has been sluggish. Compared to 2Q21, its revenue in 2Q24 has only increased by 1.3%. The company's guidance for 3Q24 also remains weak, with an expected revenue growth of low single-digit YoY. We estimate iPhone to remain flat or decline by single digit YoY in 3Q24e based on guidance.

-  AI strategy still shrouded in mystery. Unlike other Big Tech rivals who are very transparent with upcoming AI features, AAPL lags behind with clearer AI strategies. Despite assuring investors that AI has been deeply embedded within its software and services, the company has not made a big splash in the AI space yet. Management has indicated plans to unveil more details in the 'weeks ahead,' presumably waiting until its Worldwide Developers Conference on June 10^th. Whether AAPL can capitalize on the AI boom and unveil new AI features in the upcoming iPhone will influence the short & long-term outlook for AAPL.