Apple is on sale inside the Mag 7 — AlphaInk

AAPL · NASDAQ · Apr 27, 2026

Apple is on sale
inside the Mag 7.

Down 2% YTD while peers are up 8 to 24%. Margin engine is quietly hitting record highs. Three reasons we're buying — and one risk worth watching.

Last Close

$208.40

12M Target

$245

▲ +18% upside

Rating

BUY

conviction: high

By Hai Z. · AlphaInk Tech · ~4 min read

The thesis

Three numbers tell the story.

Forget the 50-page report. If you only remember three things about Apple right now, make it these:

28%

of revenue is now Services

Up from 22% three years ago. Services run at 71% gross margin vs 36% on Products. The mix shift alone adds ~150 bps of margin every year — automatically.

1.6B

active devices in the wild

Apple Intelligence (iOS 19) is shortening replacement cycles from 4.2 → 3.8 years. That's an above-trend upgrade wave on the largest installed base in tech.

$110B

returned to shareholders / yr

$90B buybacks + $20B dividends. Compounds EPS at ~3.5% structurally — before the company sells a single more iPhone.

Earnings power

Apple's margins keep going up.
Services is why.

Apple isn't just selling more — it's making more on what it sells. Gross margins just hit a record 47.2%, up from 44.1% three years ago. That's not a one-quarter pop; it's a structural shift.

Margin expansion: every layer is climbing

FY22 → FY26E · Gross / Operating / Net margin (%)

Three years ago, Apple was a 44%-margin business. Today it's a 47%-margin business — and Services hasn't even hit 30% of mix yet.

Where we differ

Wall Street is too low.

Consensus has $7.22 in EPS for FY26. We have $7.45 — a 3% gap. We've been ahead of the Street on Apple for 8 quarters running, and Apple has beaten the Street in 7 of those 8. The pattern keeps repeating.

AlphaInk vs consensus: an 8-quarter pattern

Rolling NTM EPS estimate, $

Ownership

Buffett left the building.
That's actually bullish.

For two years, Berkshire's relentless selling was the overhang on the stock. Now it's done. Vanguard, BlackRock, and State Street have been quietly accumulating into the weakness.

Q1 2023

915M

Berkshire shares of AAPL
(largest single position)

Q1 2026

~30M

After 3 years of selling
(~97% reduction)

Top 13F holders over time

Watch the orange band (Berkshire) shrink while the rest hold or grow

The biggest seller is done selling. The structural overhang is gone.

Relative value

Same Mag 7. Half the hype.
Lower the price.

Apple now trades at the cheapest forward P/E in the Magnificent 7 outside of Google. Yet its margin profile and capital-return program are arguably the strongest of the seven.

NVDA

35x

+24% YTD

MSFT

32x

+12% YTD

AAPL

28x

−2% YTD

We're not blind to the risks.

Four things that could break the thesis. We're watching all of them — and we'd cut the position if any escalates.

🇨🇳

Greater China

18% of revenue, -2% YoY. Stabilized for now but local competition + geopolitics could re-accelerate weakness.

⚖️

App Store regulation

EU DMA enforcement live. US DoJ remedies pending. A 10pp take-rate cut is a real downside scenario.

🤖

AI execution

If Apple Intelligence underwhelms in iOS 19, the replacement-cycle thesis weakens fast.

📊

Factor reversal

AAPL screens long Quality, short Momentum. A sudden value rotation hurts (but doesn't break) the call.

The verdict: Buy

12-month target: $245 (28x FY27 EPS + ~5% capital return yield)

$208 ▶ $245

+18% upside · Mag 7 relative value · stabilizing China

Apple is on saleinside the Mag 7.