Apple, Inc. (AAPL.O): Results Beat; Mixed Outlook on Margin Headwinds and Services Growth Deceleration

AAPL reported better than expected Sept-quarter results. December-quarter outlook was mixed relative to Street expectations with higher product revenues, partially offset by lower Services growth and lower gross margins. Management attributed the Services growth deceleration primarily to incremental fx headwinds and third-party licensing while noting gross margin pressures were primarily related to memory, higher inference costs from Siri AI and increased hardware deferral costs. Despite the mixed outlook, we remain constructive on Apple's long-term trajectory, supported by its ability to gain share and further drive engagement and monetization of their installed base through both third-party application, partnerships as well as first party services (for e.g. iCloud+ plans, enhanced Siri AI capabilities). We adjust our estimates slightly, while maintaining our $365 price target based on a 33x P/E multiple applied to revised FY28 EPS. We view AAPL as a defensive stock on attractive ROIC