Apple

It's becoming more clear that demand for the new iPhone Air is soft. Recent third party estimates suggest the new form factor accounts for around 5% of iPhone sales. Before it went on sale, I and the Street had estimated it would account for 15% of sales. Despite that headwind, the iPhone is growing at its fastest rate in four years, largely thanks to a massive upgrade pool showing up, albeit nine months late.

Apple’s September iPhone numbers missed expectations, rising 6% year over year compared to expectations of a 10% increase. That negative was more than offset by positive guidance, which implies iPhone growth in December will be closer to 12%, versus expectations of 6%. Clearly, iPhone is on a roll. After December, it will have averaged 10% growth in each of the past three quarters, compared to a 0.5% decline in the two years prior. I expect that momentum to carry into mid-next year. Now, the focus increasingly shifts to the high bar set for the new Siri, expected around April of next year. Anticipation of that release should move shares higher.

Here are the five pressure points for this Wednesday and Thursday’s earnings from Google, Meta, Microsoft, Amazon, and Apple (and an Nvidia bonus). Big picture: The setup carries more risk than it did three months ago, as investor confidence is notably higher heading into this round of reports. That said, the key takeaway will likely remain that we are still in the early stages of AI adoption, and the largest technology companies continue to hold their ground.

We’re now three weeks into the iPhone 17 cycle, and investor sentiment remains upbeat despite the October 3 Jefferies downgrade. Since launch, the global lead time data reinforces this optimism: wait times suggest demand is running modestly ahead of last year. Together, these datapoints support the case that iPhone unit growth will return next year, modestly exceeding the Street’s 5% growth consensus.

Apple’s decision to shelve Vision Pro in favor of glasses underscores that the optimal AI-first form factor is still unsettled. Apple is now following Meta’s push into glasses, while Jony Ive joined OpenAI in May to pursue a different path: a screenless pocket companion. I believe the phone will remain the dominant AI-first device over the next three years. Beyond that, the shift will move toward pocket companions that work alongside phones and watches. Glasses, despite Apple’s pivot, are likely capped at a few hundred million units a year, limited by comfort, privacy, and fashion.

We’re just one week into the iPhone 17 cycle, and investor sentiment is upbeat on the prospects of the iPhone returning to 5% growth in FY26. Early global lead time data reinforces this optimism: wait times suggest demand is running modestly ahead of expectations. Together, these datapoints support the case that iPhone unit growth will return next year, modestly exceeding consensus.

Apple may be exploring an investment in Intel (source: Bloomberg), but I believe the strategic benefits are limited. Over the past five years, Apple’s product strategy has moved decisively away from Intel and toward custom chip designs manufactured by TSMC. I see the only rationale for Apple to invest as political goodwill.

Over the past year, Apple may have stumbled on AI, but they continue to lead when it comes to hardware. My sense is that the iPhone 17 will exceed investors’ expectations, proving that a compelling iPhone in hand is worth more than the promise of Apple Intelligence. This sets the table for iPhone upside over the next year.

Thanks to Mark Gurman, most of the details about Apple’s event today were already known. The two wildcards were pricing and, more importantly, what the new iPhone Air form factor would actually look like, a key factor to determine uptake. The Air's look was largely what I expected. My biggest surprise was the more industrial, Apple Watch Ultra-like design of the iPhone Pro models. It is a subtle but powerful dynamic that should drive upgrades over the next year. The key takeaway is the two new form factors, the Pro models and the Air, make this the most significant iPhone hardware refresh since 2014.

Apple raising the monthly price of Apple TV+ by 30% is a small example of a bigger opportunity for the company: increase revenue per device from more subscriptions, and services and hardware price increases. I believe investors will increasingly focus on that metric as a barometer for the health of the business. Horace Dediu from Asymco estimates the average revenue per device per day is $0.47. I estimate the Apple TV+ price bump (Apple One price did not change) in the U.S., U.K. and Canada will increase average revenue per device per day from $0.47 to $0.4704. That is about four tenths of a cent increase per day. This would also add about $430m in high margin revenue, which would increase overall revenue by about 0.1% next year (The Street is looking for $435B) and earnings by 0.2%.

Apple's incremental $100 billion investment in the U.S. marks a return to the pre-tariff status quo at the start of the year. Credit Trump for returning to be supportive of Apple and credit Cook for navigating a stormy seven months. In the end, Apple will spend more with U.S. suppliers, continue to assemble phones in China and India, which means it's unlikely prices will go up on account of this deal. Margins should remain stable, and Apple investors can sleep better at night knowing the tariff risk appears off the table for the next few years.

Trump’s mention of tariffs on Indian products rising “very substantially over the next 24 hours” (currently at 25%) could have an additional 4% negative impact on operating income if India raises tariffs to 50% and Apple fails to secure an exception to reciprocal tariffs. Ultimately, I expect cooler heads to prevail, with the Trump administration granting favorable tariff treatment to Apple and Nvidia, reducing the overall impact to de minimis.