Apple: With launch of foldable iPhone duo things look twice as nice
We’ve raised our fair value estimate of Apple stock.
Mentioned: Apple Inc (AAPL)
Key Morningstar metrics for Apple
- Fair Value Estimate: USD 290.00
- Morningstar Rating: ★★
- Morningstar Economic Moat Rating: Wide
- Morningstar Uncertainty Rating: Medium
Apple AAPL unveiled the iPhone Duo, its first foldable smartphone, at its Sept. 9, 2026, event. The firm also announced the iPhone 18 Pro, the Apple Watch Series 12 and Apple Watch Ultra 4, and AirPods 5.
Why it matters: We like the Duo and expect it to be a low-volume, premium product. The starting price of USD 1,999 amplifies our expectations for Apple to see strong, pricing-led growth in fiscal 2027 for iPhone.
- This was the first event with new CEO John Ternus at the helm. We liked his immediate emphasis on AI, with Apple (primarily with iPhone) as the central device hub for personal AI. We believe Apple is doing well to carve out its niche in AI, focusing on device interaction and personalized services.
- The iPhone 18 Pro looks largely evolutionary, with expected but positive updates to the chip, camera, and battery life. We expect a larger redesign for Apple’s flagship next year, marking the 20th anniversary of the original iPhone launch.
The bottom line: We raise our fair value estimate for wide-moat Apple to USD 290 per share from USD 285, behind slightly higher pricing assumptions now including the Duo. Shares were mostly flat intraday, indicating the releases fit market expectations. Shares remain lightly overvalued to us.
- Apple has raised prices in response to memory inflation. We see inelastic demand for Apple, and we expect flat volumes in fiscal 2027 with double-digit pricing growth. The USD 1,999 starting Duo price isn’t as high as some feared and aligns with our view of low-volume destruction from price.
- Gross margin is the key debate with memory costs and pricing increases. We see Apple sharing the pain and expect more than 100 basis points of gross margin compression in fiscal 2027. We expect Apple to recoup margin in 2028, as we believe memory prices will ease as supply increases.
Figure: Apple stock - price vs Morningstar Fair Value Estimate as of 8 September 2026
Bulls say
- Apple offers an expansive ecosystem of tightly integrated hardware, software, and services that locks in customers and drives strong profitability.
- We like Apple’s move to in-house chip development, which we think has accelerated its product development and increased its differentiation.
- Apple has a stellar balance sheet and returns substantial cash flow to shareholders.
Bears say
- Apple is prone to consumer spending and preferences, which creates cyclicality and opens the firm up to disruption.
- Apple’s supply chain is highly concentrated in China and Taiwan, which opens up the firm to geopolitical risk. Attempts to diversify into other regions may pressure profitability or efficiency.
- Regulators have a keen eye on Apple, and recent regulations have chipped away at parts of Apple’s sticky ecosystem.
