Inside the Ecosystem – A 105-Page+ Deep Dive on All Things Apple

Research evidence excerpt

Inside the Ecosystem – A 105-Page+ Deep Dive on All Things Apple

conomics and Siri-

paired with a shift to more premium models enables AAPL to enabled transactions.

drive gross margin expansion. Given this consistency in the Continued Services Growth: We think investors continue to

model, we apply a 30x multiple to our medium-term EPS target underappreciate Apple’s ability to sustain durable Services

to arrive at our base target price of $365. growth. While growth should decelerate as the business

scales, we still see a path to consistent double-digit growth

Downside ($200): In our downside scenario, we assume driven by iCloud+, AppleCare, payments, advertising, Music,

memory-related headwinds are largely unmitigated, driving TV+, Apple One, and potentially AI-related services. Services

incremental headwinds to hardware gross margins. In should remain Apple’s highest-quality growth engine given its

addition, a more volatile macro limits consumer spending recurring nature, strong margins and increasing attach across

the installed base. driving softer Services growth and longer hardware refresh

cycles, putting pressure on AAPL’s mid-single digit revenue Robust Capital Returns: Apple’s capital return program

and mid-teens EPS growth model. We also assume some remains a key pillar of the thesis. While buybacks may

deterioration in Services gross margin and that Apple fails to moderate from prior peak levels as Apple balances AI

investment and supply chain needs, strong FCF and balance meaningfully launch Apple Intelligence 2.0. In this scenario we

sheet flexibility should continue to support meaningful apply a 25x multiple to our downside EPS.

repurchases. We expect capital returns to remain a steady

EPS tailwind and important downside support for the stock.