Apple’s June quarter produced numbers that looked solid on the surface but left investors with a question: Was September quarter guidance conservative, or was the business actually slowing?
Bank of America published its answer on July 30. The firm says investors are misreading the results and that the underlying business is stronger than the headline numbers show.
Bank of America analyst Wamsi Mohan reiterated his Buy rating on Apple and held his $380 price target. Apple’s stock closed July 30 at $333.43, making the target roughly 14% above where shares ended the day. Mohan also raised his EPS estimates for the next three fiscal years, Investing.com reported.
Why Bank of America says Apple’s quarter was better than it looked
Apple reported Q3 2026 revenue of $109.4 billion, up 16% from a year earlier. EPS came in at $2.02. Bank of America flagged that about $0.11 of that figure came from a tariff refund. Once you back that out, earnings were roughly in line with analyst projections. Apple met expectations. It did not clear them by a wide margin.
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September quarter guidance of 9% to 11% revenue growth read as modest to some investors.
Bank of America’s view is that the guidance reflects what Apple can manufacture, not what consumers want to buy.
The firm says Apple is facing production shortages on iPhones, Macs, and iPads tied to tight supply of advanced semiconductor nodes used in Apple’s custom chips. The analysts believe Apple would sell more devices if it could build more of them.
iPhone revenue was $54.2 billion in the June quarter, up 22% year over year.
Apple gained global smartphone market share. June-quarter iPhone upgraders reached a record. The installed base hit another record. Management said demand exceeded its own internal expectations. It also said it saw no evidence that customers pulled forward purchases ahead of anticipated price increases.
Bank of America reads both points as confirmation that iPhone demand is genuine.
The five reasons Bank of America stays bullish on Apple stock:
Bank of America’s note laid out five reasons it remains constructive on Apple
1. Supply is the constraint, not demand
Apple’s guidance reflects what it can manufacture, not what consumers want to buy. The firm believes Apple would sell more devices if it could build more of them.
2. iPhone demand is not being pulled forward
Management said demand exceeded internal expectations and it saw no evidence of customers accelerating purchases ahead of anticipated price increases. Bank of America reads that as confirmation that demand is genuine.
3. Channel inventory is unusually lean
Apple exited the June quarter with tight channel inventory and expects it to remain low through September. If supply improves alongside new iPhone launches, retailers will need to restock on top of whatever consumer demand exists.
4. Higher iPhone prices should support margins
Apple is paying more for memory but still has lower-cost inventory on hand. Non-memory components are getting cheaper. New higher-priced iPhones arrive this fall. The firm expects those factors to support profitability later in the year.
5. AI could become the next Services growth driver
Services grew 12% to $30.7 billion, slightly below Bank of America’s expectations. Mobile gaming slowed. App Store business model changes and a difficult comparison from last year’s F1 movie release added pressure. Apple still set records across cloud services, payments, advertising, and video. Paid subscriptions passed 1.5 billion. Bank of America expects Apple to eventually monetize AI through Siri by encouraging users to upgrade to higher-tier iCloud plans and premium AI services.
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Mac, iPad, and wearables results from the June quarter
Mac revenue rose 29% year over year. MacBook Pro and MacBook Neo drove the gain.
Enterprise adoption of Macs for AI development work is growing, with businesses citing privacy, performance, and lower inference costs. Educational institutions are switching from Windows laptops and Chromebooks to Macs.
iPad revenue declined 6%, but the year-ago comparison was unusually strong because of the A16-powered iPad launch.
The installed base still hit a record and more than half of buyers were new customers. Wearables revenue increased 6%. Apple Watch set a record installed base and a record for June-quarter upgrades, with more than half of purchasers buying for the first time.
Updated Apple estimates and what the $380 target is based on
Bank of America raised its earnings estimates after the quarter. The firm now models FY2026 EPS of $8.85, up from its prior $8.63. FY2027 EPS is projected at $9.92 and FY2028 at $10.95.
The $380 price target is based on 37 times expected calendar 2027 EPS of $10.32. Mohan argues Apple deserves to trade above its historical valuation because of a multi-year iPhone upgrade cycle, growing AI opportunities, continued Services expansion, strong cash generation, and potential to enter new product categories, as TheStreet reported.
Apple generated $34.4 billion in operating cash flow in the June quarter and ended the period with approximately $62 billion in net cash. It returned $25.8 billion through share buybacks and about $4 billion in dividends in the quarter. Bank of America views Apple’s capital return program as one of the most consistent in the market and a significant draw for long-term investors.
Related: Bank of America doubles down on Apple stock ahead of earnings
