Apple’s Revenue Is Soaring, But Analyst Confidence in AAPL Stock Is Cooling. Here's Why.

Apple (AAPL) continues to deliver strong financial growth, with record revenue across products and services and double-digit growth across every geographic segment. Yet, despite these impressive operating results, analysts’ enthusiasm for AAPL stock has cooled slightly.

Notably, Apple generated $109.4 billion in revenue in the third quarter, up 16% year-over-year (YOY). The top-line growth reflects continued strength across Apple’s ecosystem despite supply constraints and an uncertain macroeconomic environment.

Growth was broad-based geographically, with every geographic segment posting solid revenue growth. The Products business was the biggest contributor. Products revenue reached $78.7 billion in Q3, an 18% YOY increase, driven by strong iPhone and Mac sales. Both categories set new June-quarter revenue records.

iPhone revenue came in at $54.3 billion, up 22% from the same quarter last year. Apple reported June-quarter records across every geographic segment, as well as a record number of iPhone upgraders. This is a significant indicator for investors because the installed base and upgrade cycle remain central to Apple’s ability to monetize its ecosystem. Strong upgrade activity also suggests that demand for its devices remains resilient.

Meanwhile, the Services segment generated $30.7 billion in revenue, up 12% YOY. The company reported revenue records across every major services category. Advertising, the App Store, AppleCare, Apple Music, and Apple TV+ all reached June-quarter records, while cloud and payment services reached all-time highs.

Why Is Analyst Confidence Cooling?

Apple’s fundamentals remain solid, and the company is positioned to deliver healthy growth, supported by resilient iPhone demand and the continued expansion of its Services business. Management remains confident in the long-term potential of Services, which is increasingly a key driver of Apple’s earnings and cash flow growth.

Apple’s enormous installed base provides a significant competitive advantage. With more than 2.5 billion active devices, the company has a vast ecosystem of customers that it can monetize through subscriptions, payments, advertising, cloud services, and other offerings. Paid subscriptions have now surpassed 1.5 billion, while both transacting and paid accounts reached record highs during the quarter. Importantly, both metrics are growing at double-digit rates in emerging markets, highlighting additional room for expansion.

Despite the strong operating momentum, however, Wall Street sentiment toward AAPL stock has softened somewhat. Just one month ago, 23 of 42 analysts rated Apple stock as a “Strong Buy.” That number has since declined to 20 out of 41 analysts with coverage.

This change does not necessarily indicate that Wall Street has turned bearish on Apple. Rather, it suggests that some analysts believe AAPL stock’s current valuation already reflects a significant portion of its growth prospects.

AAPL stock now trades at 35.7 times forward earnings. That is a high valuation for a company whose earnings are expected to grow at a much slower rate. Analysts currently expect fiscal 2027 EPS growth of about 9%.

Apple’s near-term growth could also moderate a bit. Apple expects its September-quarter revenue to be affected by supply limitations across the iPhone, Mac, and iPad businesses. Management expects total revenue to grow approximately 9% to 11% YOY, representing a sequential slowdown from the June quarter.

While management sees strong iPhone demand, supply constraints could prevent Apple from fully converting that demand into revenue. Meanwhile, Services growth is expected to remain broadly similar to the June quarter.

Therefore, the fundamental picture remains healthy, but the pace of reported growth may moderate in the near term.

The Final Takeaway

Apple’s latest results reflect strong underlying demand and strengthen the long-term investment case. While Apple remains a high-quality business, moderating growth expectations, supply constraints, foreign-exchange headwinds, and a high earnings multiple are keeping some analysts from backing Apple stock.

All told, analysts currently maintain a consensus “Moderate Buy” rating on AAPL stock.