Apple (AAPL): F4Q26 Review: Pricing Power Drives Hardware Upside, But Services Moderation & Memory Headwinds Temper Earnings; Reiterate OW

The primary discussion around AAPL shares following the earnings print will likely be around the changing trajectory of Hardware vs. Services growth, where despite the concerns around supply constraints as well as price elasticity following significant price increases, Product (and iPhone) revenues have delivered to expectations, while on the flip-side we have seen a steady moderation in the growth rate for Services, which is increasingly going to call into question the long-term Services growth rate when faced with mobile gaming headwinds, app store business model changes and 3P licensing (i.e. including Google in our view) headwinds. On the Services front, we believe Apple is still in the early days in relation to the roll-out of the revamped Siri AI which will lay the groundwork for its opportunity with monetizing services with the installed base, that reached a record over 2.5B devices. In the meantime, before the incremental monetization drivers start to contribute meaningfully, w