- KeyBanc reiterates a Sector Weight on Apple ahead of its Jan. 29 earnings, citing strong recent iPhone-driven demand but increasingly mixed spending data.
- Apple’s hardware spending index rose 22% quarter-over-quarter in Q4 2025, yet December growth lagged the long-term average and fell about 7% year-over-year.
- Apple is gaining share and shipment growth globally, especially in emerging markets, but faces tougher comparisons from pull-forward effects and launch timing.
- With valuation elevated (about 35× P/E and ~1.5× PEG), upside looks limited while risks include demand softness, margin pressure, and high expectations embedded in estimates.
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KeyBanc’s decision to keep Apple at Sector Weight reflects a careful balancing of its recent strengths with emerging headwinds. On the positive side, Apple delivered strong fourth-calendar-quarter hardware performance: indexed spending rose 22% from the prior quarter—well above a three-year average of ~5.5%—suggesting upside to demand with launch tailwinds from the iPhone 17 series. Moreover, Apple captured a leading market position: Counterpoint Research reports Apple held ~20% global smartphone market share in 2025, growing shipments ~10% YoY, the highest among the top five OEMs, especially buoyed by performance in emerging and mid-sized markets.
Nonetheless, KeyBanc’s data reveal signs of cooling. Month-over-month hardware spending in December fell short of its three-year average (22% vs. ~36%), while it declined 7% YoY, signalling weakening seasonal demand or pull-forward effects from prior quarters. December’s spending undermined a run of stronger monthly data (e.g. November), revealing potential volatility in user upgrade behavior.
Valuation remains a key concern. According to InvestingPro, Apple trades at a P/E of ~34.97 and PEG ~1.5, metrics that imply expectations of sustained growth are already priced in. Evercore ISI’s raised revenue (~USD 140.5 B) and EPS (~USD 2.71) estimates for the December (calendar Q4 / Apple’s fiscal Q1) quarter surpass consensus, but also elevate the risk of downside if execution falters or fixed costs rise.
Strategic implications: Apple’s strong share and momentum in emerging markets and premium models are assets. However, execution risks include managing tariff timing effects, delivering upcoming iPhone launches to schedule, and navigating component cost pressure. The company must maintain margin discipline, deliver innovation (particularly AI features such as Siri 2.0), and meet what appear to be high expectations visible in consensus forecasts. For investors, the current setup suggests limited room for upside absent a major surprise, with risk asymmetry rising.
Open questions include: Will Apple sustain or grow ASPs in the face of both competitive pressure and cost inflation? Can services or non-iPhone segments compensate if upgrade cycles soften? How meaningful will the tariff pull-forward effects be in distorting comparisons in early 2026 versus actual underlying demand? And lastly, how will Apple manage FX, supply chain, and component cost pressures without eroding its prized margins?
Supporting Notes
- KeyBanc’s spending index for Apple rose 22% Q-over-Q in Q4 2025, exceeding the three-year average of 5.5%.
- Month-over-month spending increase of 22% fell short of the long-term (three-year) average of ~36%, and spending declined ~7% YoY in the latest month reported (December).
- Apple’s fiscal first-quarter results (calendar Q4 2025) are expected by KeyBanc to be in line with or above company guidance, based on November and Q4 trends.
- Apple’s valuation per InvestingPro: P/E ~34.97×, PEG ratio ~1.5×, and stock trading above its Fair Value estimate.
- Apple captured ~20% global smartphone market share in 2025, with shipments rising ~10% year-on-year; Samsung came second with ~19% share and lower growth, per Counterpoint Research.
- Evercore ISI raised its price target to USD 330, citing robust iPhone demand, and forecasted USD 140.5 B revenue & USD 2.71 EPS for December quarter, above consensus expectations.
- Key headwinds cited include tariff pull-forward effects, potential adverse timing of future iPhone releases, moderating U.S. sell-through, and risks from high valuation and tight comparisons.