Here’s Why Apple Stock Will Outperform in F1Q, According to Jefferies

Just as April showers bring May flowers, robust iPhone sales should be supporting Apple’s (NASDAQ:AAPL) 1QFY26 (December quarter).

At least that’s the opinion of Jefferies analyst Edison Lee, who expects the company’s results to beat expectations.

The analyst cites industry checks that suggest China growth in November exceeded 40% on a year-over-year basis, largely driven by demand for the iPhone 17 lineup.

Accordingly, Lee has now increased his 1QFY26 unit forecast by 7% to 86.9 million, representing 18% YoY growth. Assuming an estimated 2% increase in ASPs, this implies revenue growth of roughly 15% vs. the guide calling for mid- to high-single-digit growth. Lee also expects 1QFY26 EPS to rise 15%, which is 6% above the Street. Looking ahead to FY26 and FY27, the analyst forecasts revenue growth of 9% and 7%, respectively, alongside EPS growth of 12% and 10%.

Against a backdrop of strong iPhone growth in CY25 and Lee’s assumption of a $100 ASP increase for the iPhone 18 Pro and Pro Max, he expects FY26 iPhone unit growth to moderate to 4.7%, down from 7.9% in FY25, with FY27 units declining 2.5%, in part due to the shift in product launch timing. “As the foldable phone and the potential 20th anniversary edition will likely push up ASP further and keep margin strong, it could more than offset slowing vol growth into FY26 and FY27 on a high base, price hike (JEFe) and spaced out new product launches,” the analyst expounded.

Meanwhile, with memory prices having gone through the roof due to its high ASP, Lee thinks the tech giant is “highly resilient to memory cost hikes, and could benefit from pulled-in consumer demand.”

Lee reckons memory accounts for roughly 2.5%-3% of the iPhone 17’s ASP, and an 80% increase in memory costs in 2026 would lift that to about 4.5%-5%, implying an “absolute rise” of $20 per unit. Lee’s model suggests a 3% ASP increase would drive only a 3% volume decline and a 2ppt margin impact. Beyond memory, Apple’s transition from 3nm to 2nm and the adoption of advanced packaging are likely to add roughly $15 to SoC (system-on-chip) costs. As such, Lee assumes a $100 ASP increase for the iPhone 18 Pro and Pro Max to offset higher BOM (bill of materials) costs and “build in some cushions.” Given that iPhone pricing has been largely unchanged over the past three years, the analyst does not expect this increase to weigh on revenue.

Lee also thinks that the “rapidly rising memory costs” are pulling forward demand into 4Q25 and 1Q26, as consumers anticipate higher prices in future models without corresponding spec upgrades. He believes this helps explain the “continued strength” in iPhone 17 sales.

So, what does all that ultimately mean for investors? Lee reiterated a Buy rating on AAPL shares, while his price target goes from $246.99 to $283.36, implying the stock will post modest growth of 4.2% in the months ahead. (To watch Lee’s track record, click here)

Turning now to the rest of the Street, where the average target is a more optimistic $299.49, suggesting the stock will climb 10% over the 12-month timeframe. Rating-wise, the stock claims a Moderate Buy consensus view, based on a mix of 20 Buys, 10 Holds and 2 Sells. (See Apple stock forecast)

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.