On November 8, Apple CEO John Ternus recently called Apple "the best company in the world," but Bernstein believes whether Apple is also the most worthwhile stock to invest in still depends on investors' judgment regarding the prospects of its AI business and its current valuation. The firm raised its target price on Apple (NASDAQ: AAPL) from $370 to $380, maintaining an "outperform" rating, implying roughly 12% upside potential compared to the November 2 closing price of $338.32.
Bernstein believes that for investors looking to reduce their exposure to AI infrastructure investment risk, Apple remains an attractive technology stock pick.
Bernstein pointed out that Apple has more than 2.5 billion active devices, and its massive user base provides an important advantage for the future commercialization of AI services, but translating those gains into actual profits could take longer.
Apple's latest earnings report showed that fiscal 2026 fourth-quarter revenue grew 12% year-over-year to $114.5 billion, while diluted earnings per share rose 14% year-over-year to $2.10, both exceeding market expectations. Among them, iPhone business revenue grew 17% year-over-year to $57.6 billion, and Mac sales increased 24%. The company expects December-quarter revenue to grow 7% to 10% year-over-year, above market expectations.
However, Bernstein believes that rising costs and elevated valuation still limit the room for further gains in Apple's stock price. Affected by rising memory chip prices, Apple expects December-quarter gross margin of 45% to 46%, below market expectations, while slowing growth in the App Store and licensing business also puts pressure on the outlook for services revenue.
The firm therefore lowered its fiscal 2027 earnings per share forecast for Apple from $9.90 to $9.78, and its fiscal 2028 forecast from $11.26 to $11.13. In terms of valuation, Apple's current forward price-to-earnings ratio is about 35.1 times, notably higher than the historical average of 22.7 times since 2016.
Bernstein believes that if hardware costs continue to rise, or if the commercialization of the AI business progresses more slowly than expected, Apple's current high valuation will make its stock price more vulnerable to downward revisions in earnings expectations.
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