For many sellers, the holiday season can make a real difference to their year. Now the numbers are in. Shopify (SHOP) provides essential internet infrastructure for commerce, from first-time entrepreneurs to brands like Aldo, SKIMS, Supreme, and Vuori in more than 175 countries. 

In the third quarter of fiscal 2026, it handled $119.15 billion in sales, up 29.5%, and revenue rose 32% to $3.74 billion. Free cash flow was $816 million, a 22% margin, up from 18% a year earlier.

President Harley Finkelstein said Shopify is “uncommonly good at operating in two realities at the same time,” the world merchants live in today and the one they are moving toward. However, that was little short of the high bar investors had set.

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Shopify grew 32%, but expectations ran higher

In a note shared with me at TheStreet, Morgan Stanley kept an Overweight rating and a $192 price target. It said it would be buying the pullback. Morgan Stanley said the disappointment reflects how far expectations had moved, not weaker merchant demand.

Reported sales growth eased to 29.5% from 32%, as foreign exchange shifted from a tailwind to a headwind. On a constant-currency basis, however, sales grew 30%.

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The fourth-quarter guidance helps. Shopify expects low-30s revenue growth and high-20s gross profit growth, ahead of Street forecasts and in line with big investors’ hopes. Easier comparisons and capacity added before Black Friday and Cyber Monday support the setup.

Not all of the profit is permanent. The 22% free cash flow margin beat the Street’s 20%, but part of it was from a two-week pause in some U.S. marketing, tax timing, and an accounting change. Spending moves into the fourth quarter, so Morgan Stanley sees margins there modestly light.

What’s powering Shopify’s growth

Growth was broad. International sales rose 32%, offline 30%, and B2B 74%. Of merchants adding in-store point-of-sale systems, 55% were new to Shopify, including Canada Goose, BevMo and The Body Shop.

B2B strength spans home improvement, electronics, and business supplies, with demand from customers in healthcare, foodservice, and agriculture. Shopify also added local payment methods and local-currency billing in 10 more countries.

Online shopping has become less tied to a seller’s physical location. A small business can now reach customers in different markets, accept payments in local currencies, and sell through its own website rather than relying entirely on a marketplace. That wider reach is part of what makes Shopify’s growth worth watching.

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Shopify earns more as shoppers pay through it. Payments penetration passed 68%, Shop Pay sales grew about 50%, and merchant solutions revenue rose 35% to $2.91 billion.

AI is the newer story. According to the note, AI-referred orders grew 3.3x versus 2.6x for traffic, and those shoppers converted 64% more often. Management says volumes are small and gave no share of sales. 

Independent data points the same way. Adobe expects AI traffic to U.S. retail sites to grow 130% this holiday season, with online sales reaching $275.1 billion, and 77% of surveyed shoppers who used AI said they felt more confident in their purchase. 69% of them said they were less likely to return an item they bought.

Cost is the worry. Sidekick, Shopify’s merchant assistant, saw conversations rise 14% from the prior quarter while total costs fell 18%, so more use is not driving a proportional cost increase.

Morgan Stanley says buy the pullback

Subscription revenue grew 20%, below the Street’s 22%, though monthly recurring revenue growth of 19% met expectations. Morgan Stanley flags costly international expansion, price competition in Payments and Installments, and a macro slowdown as risks.

At 41x 2028 free cash flow, Shopify is not cheap. But the bank says it is in line with the sector at 1.6x when adjusted for growth, and it expects operating leverage to resume in 2027.

For the pullback that Morgan Stanley is talking about, Shopify fell from its recent high of $180.88 on Oct. 12 to a low of $135.65 on Nov. 3, according to Yahoo Finance. Since reporting earnings, however, the stock has started to recover and is now trading above $153.90.

For investors, the verdict is that a less emphatic beat doesn’t change the case, as more merchants consolidate on one platform while shopping fragments across search, social, and AI. The holiday test I flagged on Oct. 28 is now the next proof point.

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That’s exactly why CVS Health’s (CVS) breakup deserves a closer look. The healthcare giant says it’s planning to split into two companies by 2028, simplifying a sprawling business and helping improve affordability.

However, billionaire entrepreneur Mark Cuban, who co-founded Cost Plus Drugs to challenge the industry’s pricing system, isn’t convinced CVS’s planned breakup will do much for patients.

His concerns center on a critical part of CVS’s business that restructuring leaves untouched, raising questions about whether the changes would actually benefit Americans.

CVS’s massive breakup leaves a key healthcare business intact

On Nov. 4, CVS Health laid out plans to split into two publicly traded companies by the first half of 2028, separating its familiar drugstores from much of its healthcare business.

The new CVS Pharmacy will oversee about 9,000 stores, mail-order pharmacy operations, MinuteClinic, and the Health100 platform. At the same time, CVS Health will retain Aetna insurance, CVS Caremark, CVS Specialty, and other healthcare services.

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CEO David Joyner believes the two specialized businesses could operate much more efficiently while improving affordability.

But Cuban sees a catch.

“The split is great for shareholders,” Cuban wrote on X, adding that it “changes nothing for patients or anyone who pays for insurance or care.”

His concern centers on what CVS isn’t separating.

Caremark is a pharmacy benefit manager, or PBM, that negotiates prescription drug arrangements for health plans and determines which medications are covered. Those decisions influence what insurers pay, how pharmacies are reimbursed, and what patients ultimately owe.

Under the proposed restructuring, Aetna, Caremark, and CVS’s specialty pharmacy operations will remain under the same corporate roof.

Cuban, who co-founded Cost Plus Drugs to challenge traditional prescription pricing, called Joyner “a genius financial engineer,” urging lawmakers not to confuse the corporate shake-up with meaningful healthcare reform.

He warned, “Don’t fall for it.”

For Americans already struggling with medical bills, that difference is significant.

Mark Cuban’s criticism comes as Americans struggle with medical bills

The development comes at a time when Americans are growing increasingly frustrated with paying more just to maintain their insurance coverage.

According to KFF’s 2026 employer survey, the average annual premium for family coverage reached $28,303. Workers contributed $7,471 of that, or about $623 a month, with employers paying the rest.

And premiums are only the starting point. Deductibles, copays, and uncovered services can add thousands more when someone actually needs care.

The strain is changing behavior. KFF found that 43% of adults had taken steps to save money on medications, including delaying prescriptions or skipping doses.  

That backs up Cuban’s skepticism of a breakup that leaves CVS’s insurance and pharmacy benefit businesses together.

PBMs can negotiate lower drug prices for health plans. But their rebates, reimbursement arrangements, and ownership ties to specialty pharmacies also raise questions about who captures the savings.

In a 2025 report, the Federal Trade Commission found that pharmacies affiliated with the three largest PBMs generated more than $7.3 billion in revenue above estimated acquisition costs on selected specialty generic drugs between 2017 and 2022. 

On the political front, Senators Elizabeth Warren (D-Mass.) and Josh Hawley (R-Mo.) have proposed legislation targeting healthcare conglomerates’ ownership structures, a broader intervention than CVS’s voluntary separation.

On the flip side, CVS argues that integration can deliver purchasing power, coordinated care, and efficiencies. Those benefits are possible, but they don’t establish that patients will pay less after the breakup.

For households already delaying treatment to save money, that’s the test that matters.

Will CVS’s breakup make healthcare cheaper for Americans?

On the day CVS Health announced the planned breakup, its shares took a big hit. 

CVS stock sank 12.53% to $79.96 on Nov. 4, even as the company reported $108.4 billion in quarterly revenue and adjusted earnings of $2.09 per share. It raised its 2026 adjusted earnings outlook to at least $8.20 per share, according to Yahoo Finance.

Wall Street’s reaction underscores the uncertainty surrounding the separation.

As independent businesses, CVS Pharmacy and the remaining CVS Health might attract different investors, pursue growth strategies, and allocate capital more efficiently. The pharmacy chain could also establish new relationships with insurers and pharmacy benefit managers.

But none of that guarantees lower healthcare bills.

Aetna, Caremark, and CVS Specialty would remain together, potentially preserving some of the financial incentives Cuban wants changed.

For investors, the big question is whether independent companies can deliver stronger earnings while moving the share price. However, although CVS stock has had an incredibly rough year to date, up just 0.7%, it does offer a nifty 3.3% dividend yield, having paid dividends for nearly 30 consecutive years, according to Seeking Alpha.

For patients, the measures are obvious: stronger price transparency, lower prescription costs, and more affordable insurance.

Ultimately, CVS hopes the breakup creates greater value for shareholders. Whether it offers meaningful financial relief to Americans paying for healthcare remains an open question.

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But recently, I switched to On Cloud (ONON) sneakers on the court, largely because my favorite player, Switzerland’s Roger Federer, endorsed them.

Though it’s clearly a small personal decision, it captures a challenge facing the world’s best-known athletic shoe company. Nike is pulling back on some Jordan Retro releases after acknowledging it put too many iconic sneakers into the market. 

The goal is to restore the sense of scarcity that once made those shoes special.

The move may help Jordan regain its appeal. It could also leave retailers looking for another premium brand to fill shelf space. And Wells Fargo thinks that one of the biggest beneficiaries could be On, the fast-growing Swiss shoemaker backed by one of the greatest athletes of our time, Roger Federer.

For Nike shareholders, that’s a tricky trade-off worth paying attention to.

Nike’s Jordan sneaker sales have a scarcity problem

Jordan sneakers weren’t built to be easy to find. 

I remember that after watching Space Jam (1996), my father and I were always on the hunt for iconic designs and limited releases, chasing that feeling that getting the right pair meant something special.

But Nike’s steady stream of retro launches has begun working against that formula.

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Nike CEO Elliott Hill acknowledged as much on the company’s October 1 earnings call.

“We’ve been oversupplying our iconic retro product, asking them to do too much,” he said.

The numbers show why Nike is changing course. Jordan Brand sales dropped from $8.70 billion in fiscal 2024 to $7.27 billion in 2025 and $7.03 billion in 2026, a decline of nearly $1.67 billion over two years, as reported by Seeking Alpha.

In Nike’s latest quarter, Jordan accounted for about 13% of company sales, but its revenue declined at a mid-teens rate.

Even Nike’s broader performance business is growing, suggesting the weakness isn’t across the board.

There are signs shoppers aren’t feeling the same urgency, either. Needham analyst Tom Nikic found that six of seven Jordan Retro releases in September were trading below retail prices on the resale market, as reported by Retail Dive. 

Moreover, sneaker publication Sole Retriever reported an average of about 10 retro launches a month over the prior year.

Hill is looking to now limit releases of certain Jordan Retros, following cuts to Air Jordan 1 production, to restore exclusivity and demand. While this could boost the brand’s appeal, it risks short-term sales and leaves retailers with fewer Jordans to stock.

Roger Federer’s fast-growing sneaker brand sees an opening

As Nike pulls back on certain Jordan releases, another major sneaker company is positioning itself to take advantage in On Holding, the Swiss brand that had Federer among its investors.

Founded in 2010 as a running-shoe company, On brought King Roger aboard in 2019. His involvement allowed the brand to marry its technical footwear with tennis and everyday style, while On expanded into apparel and other sports.

His estimated initial stake of 2.5% to 3% in On led Forbes to value his holdings at more than $375 million, pushing his estimated net worth to $1.1 billion and making him a billionaire for the first time in August 2025.

As a result, the company turned into a breakaway success. Annual sales climbed from 1.79 billion Swiss francs in 2023 to 2.32 billion in 2024 and 3.01 billion in 2025. In Q2 2026, sales shot up 21.6% in constant currencies, with direct-to-consumer sales up 34.3% and apparel up 56.2%. Moreover, its gross margin surged to 65.4%.

That said, Wells Fargo analyst Ike Boruchow thinks Nike’s retrenchment in Jordan creates an opening, as reported by Seeking Alpha.

Initiating coverage with an Overweight rating and $48 price target, implying 31% upside to the stock’s recent closing price, he wrote:

“On is well positioned to grow well above market levels and fill the hole left by a retracement from [Nike’s] Jordan.”

Boruchow argues On is protecting its premium image by controlling inventory and limiting discounts, even at the expense of near-term sales, ahead of a potentially important 2027 innovation cycle.

At the same time, Nike’s supply cuts could give retailers another reason to make space for On. And for a younger brand already growing quickly, more shelf space could matter.

Nike’s Jordan reset creates a difficult choice for stock investors

Nike’s struggles have taken a toll on shareholders. 

At $40.49 on November 4, its stock was down roughly 36% this year, trading closer to its 52-week low of $31.97.

That might look tempting, particularly with Nike offering a 4.05% dividend yield. However, its pricing setup tells a more complicated story.

Nike trades at roughly 19.4 times trailing earnings, but 32.4 times the midpoint of its adjusted fiscal 2027 earnings guidance. Management expects revenue to decline by a high-single-digit percentage this fiscal year, with efforts to restrict supply weighing on sales into fiscal 2028.

The dividend deserves scrutiny, too. Nike’s $1.64 annualized payout exceeds its $1.25 midpoint for projected adjusted earnings per share. Management remains committed to the dividend, but maintaining it could become tougher if profits remain depressed.

That said, On reports earnings on November 10, followed by Nike’s Investor Day on November 17. For investors, those updates might reveal whether Nike’s retreat is creating a healthier sneaker business or simply giving competitors more room to grow.

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SpaceX President and Chief Operating Officer Gwynne Shotwell and her husband, Robert, plan to distribute the shares to children’s Trump Accounts starting in December 2026, according to Shotwell’s X post on Oct. 30, 2026. 

The donation comes as SpaceX has disclosed in its SEC filings that $1.9 billion of its claimed tax benefits may not survive an IRS audit.

The transfer highlights a cost-basis rule that applies broadly when families pass stock to children or grandchildren: the recipient inherits the giver’s original cost basis and holding period, which can produce a sizable capital gains bill when the shares are eventually sold, the IRS publication 551 explained.

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Shotwell’s SpaceX gift, valued above $300 million, targets lower-income children first

The gift was valued at roughly $325 million at the July pledge price, with shares worth about $162 per share at the pledge value, Fortune reported.

Shotwell announced in the X post that the shares were already transferring into escrow ahead of the December distribution.

Who qualifies for the SpaceX share gift?

1. Children aged 11 to 17 in ZIP codes with a median family income of $57,000 or less qualify for the December distribution, Reuters reported.
2. A second round will extend eligibility to military families overseas, children in foster care, and qualifying Texas counties with family incomes up to $90,000, Reuters reported.
3. Eligible families should have already received notices about the upcoming transfer, Shotwell wrote in the same post.

Shotwell held approximately 12.6 million SpaceX shares when the company completed its initial public offering (IPO) in June 2026, the SEC filing showed. The gift is personal stock from Shotwell and her husband rather than a SpaceX corporate initiative.

Trump Accounts now accept stock gifts under new Treasury rules

Treasury and the IRS issued proposed regulations in March 2026 governing the Trump Accounts contribution pilot program, with subsequent rules opening a pathway for donors to contribute individual company stock. 

That rule change allowed Shotwell’s SpaceX shares to enter the accounts, which had originally been limited to low-cost index fund investments.

Congress created the accounts through the One Big Beautiful Bill Act, signed into law on July 4, 2025, with contributions opening one year later. The Treasury Department structured them as custodial traditional Individual Retirement Accounts (IRAs) for children under 18, the IRS stated.

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Families can contribute up to $5,000 per year, and children born after Dec. 31, 2024 and before Jan. 1, 2029, qualify for a one-time $1,000 government deposit, Wells Fargo outlined.

Donated shares must generally be held for five years, or until the end of the year a child turns 17, Fortune reported.

Assets inside the accounts grow tax-deferred during the child’s youth, and once the beneficiary reaches age 18, the account converts into a standard IRA, the IRC §530A noted. 

More than 6 million children had been enrolled in Trump Accounts as of early June 2026, Scott Bessent, the U.S. Treasury Secretary, told the Senate Finance Committee on June 3, 2026.

The $19,000 IRS exclusion and SpaceX’s $1.9 billion tax question

Each eligible child receives roughly one share of SpaceX stock, valued at about $162 based on SpaceX’s pre-holiday closing price, according to Fortune’s coverage of the pledge.

That figure falls below the federal annual gift-tax exclusion of $19,000 per recipient for 2026, the IRS confirmed.

Scott Hanson, Co-Founder and Vice Chair of Allworth Financial, told Fortune that donors who give stock or cash directly to Trump Accounts cannot claim a charitable deduction, separating this structure from traditional philanthropic giving. 

<strong>There is no tax deduction for giving either stock or money to Trump Accounts</strong>.

Wealthy donors who want the deduction route can transfer appreciated shares through a private foundation first, then direct those gifts toward children’s accounts.

SpaceX as a corporation has disclosed $1.9 billion in “uncertain tax benefits” in its S-1 filing, the Institute on Taxation and Economic Policy (ITEP) reported in a June 2026 analysis by senior fellow Matthew Gardner. 

Those are deductions or credits the company claimed while acknowledging they would probably not survive a thorough IRS audit.

SpaceX added $282 million in new uncertain tax positions for 2025, representing more than a third of its $718 million income tax expense. 

Budget cuts during Elon Musk’s tenure at the Department of Government Efficiency (DOGE) have reduced the IRS’s capacity to audit complex corporate returns, ITEP noted.

What families gifting stock should track before transferring shares

For families making similar transfers, the tax outcome depends on three pieces of documentation for each position: the donor’s adjusted basis just before the gift, the fair market value at the time of transfer, and any gift tax paid, according to IRS Publication 551.

The full difference between the donor’s original cost and the recipient’s eventual sale price is treated as the recipient’s taxable capital gain, the IRS confirmed. That gap widens for long-held positions where the original purchase price is below the stock’s current trading price.

When a gift exceeds the annual exclusion, the donor must file Form 709 to report the transfer and document the cost basis, the IRS Form 709 Instructions noted. 

Even below that filing threshold, accurate cost-basis documentation allows the recipient to calculate their eventual capital gains liability correctly.

Related: Elon Musk wants every American kid to own a SpaceX share

And when some begin looking for medical help, a whole growing range of obesity drugs becomes a new worry in the room. The question is no longer how to lose weight, but which treatment is worth considering.

Novo Nordisk is about to add another option, as CEO Mike Doustdar told Bloomberg on Nov. 4. The drug is CagriSema, a once-weekly injection.

We are hopeful that we will be able to get the timely approval from the FDA at the end of this year and launch it at the beginning of next year.

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What is Novo’s CagriSema, and why do patients and investors care?

CagriSema combines semaglutide, the GLP-1 drug behind Wegovy and Ozempic, with cagrilintide, which acts on the amylin pathway.

Together, they work on appetite, slow stomach emptying, and change how the brain responds to high-calorie food cues, an effect many patients call “food noise.”

In the Phase 3 REDEFINE 1 trial, adults without type 2 diabetes lost an average of 20.4% to 22.7% of body weight over 68 weeks, according to a Healthline report. In REDEFINE 2, adults with type 2 diabetes lost roughly 13.7%.

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Novo’s Q3 update added a REDEFINE 9 result of 21% weight loss at week 68. Side effects are mainly gastrointestinal, such as nausea, vomiting, diarrhea, and constipation, consistent with the class.

The diabetes data matter competitively. In the REIMAGINE 5 trial, CagriSema produced 12.4% weight loss against 9.1% for tirzepatide 5 mg, with non-inferior HbA1c reduction at week 60. 

I covered that comparison when Novo shared it alongside Viking’s VK2735 data, and it is Novo’s clearest head-to-head argument against Lilly’s tirzepatide.

Novo Nordisk’s CagriSema launch plan: every channel, but no price yet

Doustdar said Novo is “already in production mode and training our team and staff to go not just through traditional channels, but through all channels,” Bloomberg reported. E-health platforms and Novo’s own NovoCare pharmacy will be key access points.

Asked whether CagriSema would launch direct to consumer immediately, he answered: “Yes, absolutely.” On price, he gave nothing. 

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“We will not reveal our pricing strategy right now,” he said, adding that affordability matters to Americans and that the drug will be priced “according to the value it provides, but also with consideration for patients.”

That answer is the real open question. For all the people trying to lose weight, price and access decide whether a drug on a trial chart ever reaches them. Approval is expected around late 2026, and the company has not said anything about cost.

What Novo’s Q3 numbers say about momentum

Novo reported Q3 2026 results on Nov. 4 and raised its full-year outlook for adjusted sales and operating profit, according to the company’s earnings release.

Adjusted and reported sales rose 4% at constant exchange rates. Adjusted operating profit rose 27%, helped by an easy comparison with DKK 9 billion (approximately $1.35B) in transformation costs in Q3 2025.

The Wegovy pill is carrying much of the story. It has launched in the U.S., UAE, U.K., and Germany, and sales were DKK 5,394 million in Q3 (roughly $810,341), with four more launches since then, bringing the total to eight markets. 

The Wegovy franchise holds more than 50% of new patient starts in the U.S. branded obesity market. The Ozempic pill, launched in May, shows weekly new-to-brand prescriptions up about 100% from pre-launch levels under the Rybelsus brand.

Doustdar called it “a stronger-than-expected third quarter” and said Novo is preparing for the U.S. CagriSema launch in early 2027, subject to regulatory approval.

I remember covering Lilly‘s side of this race when Dave Ricks said Foundayo had one-third of new oral GLP-1 starts. Novo’s counter is a wider shelf: a pill, a stronger injection, and now a combination drug.

What to watch next on CagriSema

CagriSema is still investigational, so everything depends on the FDA decision expected around the end of the year. Beyond that, watch for pricing, how quickly e-health and NovoCare channels scale, and whether the pipeline, including oral zenagamtide in Phase 3, keeps pace with Lilly.

One clarification worth remembering is that CagriSema is an injection, not a pill. Novo’s oral options are the Wegovy and Ozempic pills, with oral amycretin still early in development.

If you are reading this as a patient, the news is more choice. And of course, for investors, the stock has to prove that choice becomes share.

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Bank of America is not in that camp.

In a Nov. 3 note shared with TheStreet, analyst Wamsi Mohan reiterated a Buy rating on Apple (AAPL) and held his price target at $370. Based on the stock’s closing price of $338.32 at the time of the note, that target implies upside of roughly 9.4%.

The call comes after Apple’s fiscal fourth quarter came in ahead of expectations on both the top and bottom lines.

But Mohan’s thesis is not really about one quarter. It is about what he sees building underneath the headline numbers and whether the market is pricing Apple’s AI opportunity correctly.

Apple’s iPhone business continues to deliver

The quarter gave BofA plenty to work with on the iPhone side. Apple reported fiscal fourth-quarter revenue of $114.5 billion, up 12% year over year and above the high end of its own guidance.

Earnings per share came in at $2.10, a 14% increase from the prior year, though that figure included a $0.05 benefit from tariff refunds.

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The iPhone was the standout. Revenue from the product climbed 17% to $57.6 billion, a September-quarter record. Demand held up in the U.S. and Greater China, even as supply constraints limited what Apple could actually put in customers’ hands.

The latest lineup, including the iPhone 18 Pro, Pro Max, and the foldable iPhone Duo, helped sustain that demand, and the company raised iPhone prices in September, though management acknowledged it was too early to gauge how consumers would absorb the increases.

BofA expects iPhone revenue growth to stay strong through the December quarter, backed by higher average selling prices and continued demand. Apple has guided fiscal first-quarter revenue to between $154 billion and $158 billion, above analyst consensus.

Supply on the iPhone Duo remains tight, with no timeline from Apple on when that catches up.

Higher memory costs could pressure Apple’s margins

Revenue growth is one thing. What it costs Apple to generate that growth is a separate conversation, and that is where the picture gets more complicated heading into the next few quarters.

Apple’s gross margin came in at 47.9% in the September quarter, helped along by those tariff refunds. Strip that benefit out, and the underlying picture is less comfortable.

Higher memory costs created a 100-basis-point sequential headwind for both overall and product gross margins, and Apple has guided gross margins for the December quarter to between 45% and 46%.

BofA expects the pressure to persist across several quarters as memory prices continue to rise. Apple is working to offset the impact through savings on non-memory components, inventory bought at lower cost, and higher product pricing, and the bank believes those measures will cushion some of the decline.

But cushioning is not the same as neutralizing, and near-term margin compression looks likely regardless.

For investors, that creates a distinction worth keeping in mind. Strong revenue growth does not automatically translate into equally strong earnings growth when the cost of producing the hardware keeps climbing.

The gap between those two metrics is something BofA is watching closely in its fiscal 2027 and 2028 estimates.

Services growth is slowing, but BofA sees a recovery ahead

Services revenue hit an all-time record in the September quarter, reaching $31.6 billion on 10% year-over-year growth. The record headline masks a deceleration that investors are starting to pay attention to.

Growth had come in at 12% the prior quarter, and BofA now expects it to ease further to between 8% and 9% in the December quarter.

Several things are pulling in the same direction at once. Third-party licensing revenue has softened. App Store growth has gone relatively flat. Mobile gaming continues to drag. Changes to Apple’s App Store business model in certain markets and a U.S. court ruling affecting link-out transactions are adding more friction. Higher cloud costs tied to Siri’s AI features are also expected to weigh on Services margins in the near term.

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BofA is not reading this as a structural problem. The bank expects Services growth to pick back up over the longer term as Apple finds ways to monetize AI-powered Siri features and pulls more of its installed base into new subscription and service offerings.

Apple has more than 2.5 billion active devices. The monetization opportunity attached to that base is something the market has not fully priced in, in Mohan’s view.

Apple’s AI opportunity remains central to the bullish case

The near-term pressures on margins and Services are real, but BofA’s conviction on Apple is built around a longer view. The bank expects Apple to benefit from a multiyear iPhone upgrade cycle as consumers move toward hardware capable of running generative AI features locally.

That is a different kind of replacement cycle than Apple has historically seen, and if it plays out the way BofA expects, it could sustain iPhone revenue growth well beyond the current product lineup.

Apple’s internally developed silicon, its tightly integrated product ecosystem, and the potential for new AI-driven services sit at the center of that argument. Meanwhile, capital returns continue to give shareholders something to hold onto while the AI story develops.

During the September quarter, Apple returned $28 billion to investors, including $24 billion in share repurchases and $3.9 billion in dividends.

BofA nudged its fiscal 2027 earnings-per-share estimate up slightly to $9.15 from $9.12, while trimming its fiscal 2028 estimate to $10.20 from $10.40.

Its $370 price target is based on approximately 35 times its calendar 2028 earnings estimate of $10.32, a valuation the bank believes is justified by Apple’s AI positioning, the potential upgrade cycle, and the company’s overall financial strength.

The core question for investors right now is whether Apple’s revenue growth remains strong enough to offset the margin compression and Services deceleration in the quarters ahead.

BofA’s answer, for now, is yes.

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