BofA maintains Apple Buy rating, raises target price to $325

Overview

This is a Bank of America company research report and rating update on Apple Inc. Ahead of F2Q26 earnings, the firm maintains a Buy rating and raises its target price to $325, mainly on strong iPhone sales, sustained double-digit growth in Services revenue, FX tailwinds, and an expected new round of capital returns.

Core views

The report's core view is that Apple is likely to deliver revenue and EPS above market expectations in both F2Q26 and F3Q26. The analyst expects F2Q26 revenue to grow 18% y/y, above the company's 13%-16% guidance range; meanwhile, the iPhone upgrade cycle, AI features, a foldable iPhone, and an enhanced Siri could continue to support future demand. On margins, higher Services mix supports profitability, but rising DRAM and NAND memory costs will pressure hardware gross margin.

Analysis framework

The report uses a combination of segment-level forecasting and relative valuation: it first breaks down quarterly trends in iPhone, Services, Mac, iPad, and gross margin, then compares BofA forecasts with Street consensus, and derives the $325 target price using 32x C27E EPS. The analysis also incorporates FX effects, product launch timing changes, supply chain costs, App Store regulation, and capital return assumptions.

Methodology notes

• Valuation methodsP/E target price method

  32x C27E EPS

  The $325 target price is based on 32x C27E EPS of $10.14; this multiple is toward the higher end of the 5-year historical 19-35x range, justified by a multi-year upgrade cycle, cash balance, improved service mix, and new device opportunities.

• earnings forecastQuarterly results preview

  BofA forecast versus Street consensus

  The report compares revenue, EPS, and gross margin forecasts for F2Q26 and F3Q26 with Street estimates to assess the likelihood of upside surprises and guidance strength.

• business splitSegment revenue bridge

  iPhone, Services, Mac, and iPad segment forecasts

  The report separately analyzes iPhone shipments and ASP, Services y/y growth, MacBook Neo-driven demand, iPad product cadence, and hardware seasonality.

• macro and costFX and gross margin bridge

  FX tailwind and memory cost pressure

  The report expects FX to provide roughly a 4% y/y tailwind to F2Q26 revenue and about a 2% tailwind in F3Q26, while higher memory prices may weigh on product gross margin.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Apple Inc. / AAPL

  Core coverage name

  Strengths

  Strong iPhone demand, high-margin and steadily growing Services, a massive installed base, stable capital returns, and ecosystem plus hardware advantages in AI at the edge.

  Weaknesses

  Hardware revenue is seasonal, App Store growth is slowing, and product gross margin is affected by memory costs and product mix.

  Comparison

  BofA's F2Q26 and F3Q26 revenue and EPS forecasts are both above Street estimates; the 32x target valuation multiple is above the 5-year historical median of 27x.

  Risks

  iPhone cycle falling short of expectations, slower Services growth, regulatory and antitrust pressure, China competition, and search payment pressure from AI search substitution.

Key data

• Rating and target priceBuy; target price $325, prior $320Target price is based on 32x C27E EPS of $10.14.
• Current price$259.20Price disclosed on the report cover.
• F2Q26 revenue/EPS forecast$113bn / $2.00Above Street's $109bn / $1.93.
• F3Q26 revenue/EPS forecast$106bn / $1.82Above Street's $103bn / $1.74.
• F2Q26 revenue growth+18% y/yAbove the company's 13%-16% revenue growth guidance.
• F2Q26 gross margin48.2%Near the low end of the company's 48%-49% guidance range.
• F3Q26 gross margin47.6%Expected to decline from F2Q26 due to product mix and rising component costs.
• F2Q26 iPhone shipment forecast60mn unitsRaised by 2mn from prior estimates and roughly in line with consensus.
• Services revenue growthF2Q26 +14% y/y; F3Q26 +13% y/yApp Store growth is about +7% y/y, but Licensing and Subscription continue to support growth.
• Capital return expectationsNew $100bn buyback authorization; dividend +5%The analyst expects this to be announced on the F2Q26 earnings call.

Impact & implications

For investors, the report reinforces a positive narrative around Apple short-term earnings upside and the medium-term upgrade cycle. If iPhone demand, Services growth, AI feature rollout, and capital returns materialize, AAPL's premium valuation multiple could remain supported; however, memory costs, App Store regulation, Google search payments, China demand, and a longer innovation cycle will still limit upside.

Risks

• iPhone demand may be pulled forward, lengthening the upgrade cycle.
• Rising DRAM and NAND prices may compress product gross margin.
• Changes to App Store rules, DMA, and regulatory pressure may hurt high-margin Services revenue.
• The China market faces local competition, shifting preferences, and demand elasticity risks.
• AI search and AI assistants could weaken Safari search traffic, affecting Google's search revenue share payments to Apple.
• A stronger U.S. dollar, trade conflicts, tariffs, and antitrust litigation could create additional pressure.

What to watch

• F2Q26 earnings after the close on April 30 and F3Q26 guidance.
• Whether Apple announces a new $100bn buyback authorization and roughly 5% dividend increase.
• Progress on Apple Intelligence, Siri, and Gemini integration at WWDC 2026.
• Whether iPhone 18 Pro, foldable iPhone, and base iPhone 18 launch timing meets expectations.
• The quality of growth in Services revenue across App Store, Licensing, and Subscription.
• The impact of higher memory costs on F3Q26 and later-quarter gross margins.
• iPhone demand and market share trends in China.