• Oppenheimer (OPY) reiterates Perform rating on Apple (AAPL), cautioning that elevated valuation limits upside.
  • Firm forecasts Q4 revenue of $112.9B and EPS of $1.96, both below consensus, and sees 2027 EPS 7% shy of expectations.
  • Apple set to report quarterly results after the close today.

A High Bar

With Apple ($AAPL) poised to release its fiscal fourth-quarter results after the market closes today, Oppenheimer analyst Martin Yang is urging caution, reiterating a Perform rating and warning that the company’s premium valuation leaves little room for disappointment. In a note to clients, Yang argued that investor expectations are already lofty, and any sign of slower growth or rising costs could pressure shares.

The firm projects fiscal Q4 revenue of $112.9 billion, just below the $113.4 billion consensus, and earnings per share of $1.96 versus the $1.99 Street estimate. More importantly, Oppenheimer’s fiscal 2027 EPS estimate of $8.91 sits about 7% below consensus, reflecting concerns over slowing iPhone growth, rising memory costs, and headwinds in the Services segment. Yang also expects a 150-basis-point hit to December-quarter product gross margins from higher DRAM and NAND memory prices.

The Memory Cost Squeeze

The warning comes as Apple grapples with a shifting cost landscape. The AI data-center buildout has fueled demand for memory chips, leading to shortages and higher prices. That creates a transmission mechanism from enterprise AI spending to consumer electronics: Apple must either absorb higher input costs, raise selling prices, or adjust its product mix. The company has already raised prices on some products to help offset these pressures, but the supply problem is not expected to abate quickly.

Oppenheimer’s margin forecast underscores the risk. A 150-basis-point reduction in product gross margin—not overall margin—would represent a meaningful drag on profitability during the crucial holiday quarter. While revenue can still rise, a larger share of each hardware sale going toward components could stifle earnings growth.

Services Growth Moderating

Adding to the concern, Services revenue growth is expected to slow to almost 10% at $31.56 billion, the slowest pace in more than three years, according to Reuters (TRI). Oppenheimer sees limited near-term reacceleration due to slower App Store growth, regulatory pressure, and decelerating Google (GOOGL) search revenue. Services is a critical profit engine for Apple—in the June quarter, it generated $30.7 billion in revenue against just $7.5 billion in associated costs. Slower growth in that high-margin business makes hardware-cost inflation harder to offset.

What to Watch

Today’s report will be the first earnings call for new CEO John Ternus, who succeeded Tim Cook on September 1. Investors will scrutinize his commentary on AI strategy, including the revamped Siri, and Apple’s plans in China following approval of its AI software there. The September quarter captures only nine days of iPhone 18 Pro sales, while the iPhone Duo, Apple’s first foldable, launched October 23 and will contribute to the holiday quarter.

The relatively small disagreement over the September quarter therefore understates the investment debate: can Apple sustain enough earnings growth to justify its premium share valuation? Oppenheimer’s cautionary stance suggests that the answer may be no, at least in the near term. Apple did not immediately respond to a request for comment.

Update: This article was updated to clarify that Oppenheimer’s 150-basis-point estimate refers to product gross margin, not overall margin.