Catch up on the essentials
- Bank of America expects Apple’s fiscal fourth-quarter revenue, for the quarter ending September 2026, to be approximately $113 billion, slightly below the $114 billion market consensus.
- The Pro, Pro Max and foldable Duo launched in September, while the base iPhone 18 and next-generation Air are expected at the end of the first quarter of 2027.
- Higher selling prices, improved sales mix, cost measures, in-house modems and supply-chain concessions could offset part of that pressure, leaving a net effect of roughly five percentage points on iPhone gross margin, equivalent to about 2.5 percentage points for Apple overall.
Selected from this article · 2026-11-08
Read on for the full pictureNear-term estimates move below consensus
Bank of America expects Apple’s fiscal fourth-quarter revenue, for the quarter ending September 2026, to be approximately $113 billion, slightly below the $114 billion market consensus. Its $1.97 earnings-per-share estimate was also below the $1.99 consensus, although its revenue forecast remained within Apple’s guidance for 9% to 11% year-over-year growth.
The larger gap appeared in the December 2026 quarter. BofA forecast revenue of $135.7 billion, down 5.6% year over year, against market consensus of $153 billion. Its $2.59 earnings-per-share estimate was below the $2.93 consensus. The bank also reduced its fiscal 2027 iPhone unit forecast by 9 million to 247 million, below market expectations of 260 million units, and lowered full-year revenue and earnings-per-share forecasts to $526 billion and $9.12, respectively.
Staggered launches shift the iPhone sales cycle
BofA attributes its lower near-term estimates to Apple’s staggered product schedule. The Pro, Pro Max and foldable Duo launched in September, while the base iPhone 18 and next-generation Air are expected at the end of the first quarter of 2027. The bank expects some buyers to postpone purchases until those models arrive, shifting demand from the December quarter into later periods.
That shift is not expected to be fully temporary. BofA assumes some demand will be lost because the base model will be unavailable, while the older iPhone 17 may only partially fill the gap because its price for the same configuration rose by $100 rather than falling by the customary $100.
The bank expects iPhone revenue in the quarter ending December 2026 to increase 24% from the preceding quarter, compared with an average 78% increase during the comparable periods from 2020 through 2025. It therefore views consensus revenue for December as too high and consensus for June 2027 as too low.
Memory costs create a substantial margin hurdle
BofA estimates that rising memory prices reduce iPhone gross margin by about nine percentage points. Higher selling prices, improved sales mix, cost measures, in-house modems and supply-chain concessions could offset part of that pressure, leaving a net effect of roughly five percentage points on iPhone gross margin, equivalent to about 2.5 percentage points for Apple overall.
The bank’s scenario assumes combined DRAM and NAND costs per iPhone rise from $55 to $245. Based on a 46.5% gross-margin baseline excluding tariff refunds, it estimates Apple’s overall gross margin could fall to 43.6% to 44.6% by the quarter ending March 2027, below the 47.7% market consensus cited at the time. Actual results could differ because remaining tariff refunds and memory inventories may affect the outcome.
Services and AI sustain the longer-term case
The near-term caution has not changed BofA’s Buy rating or $370 price target. The bank expects gross margin to begin recovering in the latter part of fiscal 2027 and forecasts 44.2% overall gross margin in the quarter ending June 2027 before recovery.
BofA expects services revenue in the quarter ending September 2026 to grow approximately 10% year over year, down from 12% in the June quarter. Over the longer term, the investment case rests on a multiyear iPhone upgrade cycle, AI features running on devices, and potential growth in subscriptions and services as Apple monetizes AI-powered Siri. The bank also values Apple’s ecosystem lock-in and position across consumer hardware and artificial intelligence.
A November 7 report also said BofA analyst Wamsi Mohan places Apple’s calendar 2028 earnings per share at $10.32, which the bank says is supported by a price-to-earnings multiple of roughly 35 times projected 2028 profits and helps justify the $370 target. That is an analyst expectation, not a reported Apple result. The main unresolved variable is whether memory-cost pressure proves more persistent than modeled or Apple’s pricing power is sufficient to protect margins.
Industry and product implications
Industry / product | Disclosed fact | Interpretation & stage | Verification signal | Main risk |
|---|---|---|---|---|
Apple iPhone | BofA expects staggered iPhone launches to defer some demand from the quarter ending December 2026 into later periods. Separately, it forecasts 247 million iPhone unit sales for fiscal 2027. | Qualified inference; planned. Base iPhone 18 and next-generation Air launches at the end of the first quarter of 2027 may shift the timing of handset purchases, although BofA also assumes some demand is lost. | Subsequent disclosures of iPhone revenue, unit sales and launch timing can test whether demand was deferred or lost. | A prolonged gap in the base-model lineup could permanently reduce demand rather than merely shift it between quarters. |
Apple Services | BofA expects services revenue in the quarter ending September 2026 to grow approximately 10% year over year, down from 12% in the quarter ending June. | Qualified inference; forecast. Services growth may provide partial support for the longer-term financial outlook, while slower App Store growth and lower-than-expected Google search revenue constrain the near-term rate. | Subsequent services revenue and App Store growth disclosures can test the expected trajectory. | Slower licensing and App Store revenue could weaken the diversification benefit BofA expects. |
Apple in-house modems | BofA identifies in-house modems among the offsets to higher memory costs. [1] | Research watchlist; unknown. In-house modems may reduce component costs and partly cushion the gross-margin effect of rising memory prices. | Future disclosure of Apple gross margin and component-cost trends can indicate whether savings offset part of the memory headwind. | The reviewed reporting does not quantify the modem savings or establish additional procurement demand. |
Apple iPhone 17 | BofA says the older iPhone 17 can partially fill the base-model gap, although its price for the same configuration rose by $100 instead of falling by the customary $100. [1] | Disclosed fact; planned. A less-favorable pricing environment for the older model may only partially substitute for unavailable base-model iPhone 18 sales. | Subsequent iPhone mix and revenue disclosures can show whether the older model adequately fills the gap. | The price change may suppress substitution and contribute to lost rather than deferred demand. |
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