Apple Inc.: Based on the strong performance of the iPhone and services business, the outlook for the earnings report and guidance is optimistic; the target price is raised to $325.

Expect strong report & guide based onstrength on iPhone & Services; PO to $325 Reiterate Rating: BUY | PO: 325.00 USD | Price: 259.20 USD We model revs above guidance for the Mar qtr; Reit Buy 14 April 2026 As we head into F2Q26 (Mar Q) earnings after market close on Thur Apr 30th, we see Equity upside to Street estimates given continued strong sales of iPhone, double-digit growthin Services revs and benefit from FX. Upcoming catalysts include expected new buyback authorization, WWDC in June, and launch of a foldable iPhone in the fall & launch of anenhanced Siri with integration with Gemini AI which can drive higher upgrades. We seeiPhone demand remaining strong and raise our iPhone units for the Mar qtr to 60mn. Wemodel Services rev growth of 14% y/y consistent with the growth seen in the Dec qtrand mgmt.’s guidance, even though global App store sales remain relatively weak (+7%y/y in Mar qtr). Our F2Q rev/EPS are $113bn/$2.00 vs. Street $109bn/$1.93 (we modelrev +18% y/y vs guidance 13-16% y/y). We model GM of 48.2% (vs. guidance 48-49%)but see sequentially lower margins in F3Q (June Q) on mix and higher component costs.We expect Apple to guide F3Q rev growth of 10-15% y/y and GM range of 47-48%. We Wamsi MohanResearch AnalystBofAS+1 646 855 3854wamsi.mohan@bofa.com iPhoneremains strong, launch timing impacts seasonality We raise our iPhone units forF2Q by 2mn units to 60mn as we see strong demand foriPhone 17. We expect a shift in new iPhone release timing (see priornote on Asiachecks), with launch of the Pro iPhone 18 models and foldable iPhone in the Fall, whilethe base iPhone model as well as next generation of iPhone Air gets released in C1Q27. Ruplu BhattacharyaResearch AnalystBofAS+1 646 855 0315ruplu.bhattacharya@bofa.com Levers to offset memory costs, new buyback authorization Aisling GrueningerResearch AnalystBofAS+1 646 855 4273aisling.grueninger@bofa.com We model product GM to compress 200bps q/q in the June qtr to 35.9% on highermemory costs, but model Services margins remaining flat at 76%. Levers to offsethigher memory costs include: 1) supply chain relationships with memory providers, 2)higher mix of iPhones (low end Pro model now starts at $1,100), and 3) ability to alsoraise prices now that Samsung has raised prices of Galaxy model phones. We expect Ryan Seungin ChoiResearch AnalystBofAS+1 646 743 0587ryan.choi2@bofa.com Adjusting estimates; POmoves to $325 (from $320) Our F26E revenue/EPS move to $466bn/$8.55, from $462bn/$8.36. Our PO moves to$325 (from $320) on 32x (unchanged) our C27E EPS of $10.14 (prior $9.94). BofA Securities does and seeks to do business with issuers covered in its researchreports. As a result,investors should be aware that the firm may have a conflict ofinterest that could affect the objectivity of this report. Investors should consider thisreport as only a single factor in making their investment decision. iQprofileSMApple Inc. Company SectorIT Hardware Company Description Apple Inc. (AAPL)designs, manufactures, and marketsconsumer electronics and computers, and has developed itsown proprietary iOS, Mac OS, TvOS and Watch OS operatingsystems and related software platform/ecosystem.Revenues are principally derived from the iPhone line of Investment Rationale Our Buy rating on Apple is based on 1) expected strongiPhone upgrade cycle in F25, F26 driven by theneed forlatest hardware to enable Gen AI features, 2) higher growthin Services revenue, 3) higher margins from more internallydeveloped silicon, 4) continuing capital returns, 5) AIfeatures that can drive higher institutional ownership, and Summary of estimate changes Figure1:Our iPhone unit estimatesfor F26move higherby 2mn, Mac units by 1.5mn, while our Watch estimates move lowerBofA estimates:before and after (revenues in $mn, units in K) We raise our F2Q26 (Mar quarter) iPhone unit estimates by 2mn to 60mn which is nowat the same level as consensus. Based on developer revenues reported by Sensor Tower,we expect App Store sales grew 7% y/y in F2Q26. App Store sales in China continued toshow some sequential improvement. Globally, App Store revenues from Gamescontinued to compress (44% of total revenue vs. historic highs of 50%+). On a y/y basis,revenue from Productivity Apps grew 300bps y/y. We model Services revenue growth of14% y/y for the Mar quarter. This compares to management’s guidance for Services Guidance summary for F2Q26 (Mar qtr) Figure2:Summary of June quarter (F2Q26) guidanceApple has guided F2Q26 revenue to grow 13-16% y/y Results preview – F2Q26 (Mar qtr) Figure3:We model revenues growing 18% y/y which is higher than guidance of 13-16% y/yBofA vs. Street estimates (revenues in $mn) We model F2Q26 revenue of $113bn vs. Street at $109bn. We model gross margin of48.2% (vs. Street at 48.4%, and mid-point of company guidance at 48.5%). We modelServices revenues to continue to grow at 14% y/y similar to the growth seen in the Decquarter. This is in-line with guidanc