Bernstein: Apple Gross Margin Under Pressure, Market May Have Underestimated Medium-to-Long-Term Logic

According to TechFlow Research, Bernstein's July 31 research report shows that Apple's Q3 revenue was $109.4 billion, up 16.4% year-over-year, with actual earnings per share of $1.91, slightly exceeding the market expectation of $1.89. Excluding the impact of tariff rebates, the actual gross margin was 48.1%, at the midpoint of the guidance. Q4 revenue growth guidance was lowered to 9% to 11%, with gross margin guidance at 47% to 48%, compressed by approximately 160 basis points quarter-over-quarter; rising memory costs are the core drag. iPhone revenue was $54.3 billion (up 22%), and Mac revenue was $10.4 billion (up 29%), both exceeding expectations. Services revenue was $30.7 billion, up 12% year-over-year, below the expected $31.4 billion. Bernstein maintained its Outperform rating, raising the price target from $350 to $370, corresponding to approximately 33 times fiscal 2028 earnings per share. Memory inflation will continue for several more quarters, but Apple's market share is expanding, and the AI-driven upgrade cycle is the long-term logic. Bernstein believes the market's concerns over short-term memory costs are excessive, underestimating Apple's medium-to-long-term value.