How Utilities Can Help Generate $13 in Earnings Per Share of Apple Stock

For years, investors have viewed Apple (AAPL) as a hardware powerhouse driven by blockbuster iPhone cycles. But increasingly, Wall Street believes that the company’s future revenue engine may not come from devices alone, but from the rapidly growing ecosystem wrapped around them. That change is now at the heart of a new bullish thesis from Evercore ISI, whose analysts argue that Apple’s high-end services business could help boost earnings per share to $13 over time.

The firm recently raised its price target on Apple stock to $365 while maintaining an “Outperform” rating, citing the company’s growing ability to monetize its large installed base of more than 2.5 billion active devices through subscriptions, payments, cloud services, advertising, licensing, and artificial intelligence (AI) offerings. Evercore believes investors remain too focused on near-term iPhone demand volatility while underestimating the long-term earnings potential embedded in Apple’s Services segment.

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The bullish argument stems from the fact that services revenue carries much higher margins than hardware. As recurring revenue streams such as iCloud, Apple Music, AppleCare, Apple Pay, and App Store monetization continue to expand, Apple’s profits can grow even if overall unit growth moderates. Evercore estimates that the company can support EPS growth driven by this shift to services, premium device pricing, and future AI monetization opportunities.

Does this change make the stock an attractive buy now?

About Apple Stock

Based in California, Apple stands as a forward-looking company and a global leader in hardware, software, and services. Its portfolio includes iconic devices such as the iPhone, iPad, Mac, and Apple Watch, as well as widely used platforms such as the App Store, iCloud, Apple Music, and Apple TV+. The company currently has a market capitalization of $4.4 trillion and Magnificent Seven status.

Apple shares have delivered a strong performance over the past year, reflecting renewed investor confidence in the company’s Service growth, AI monetization opportunities, and ecosystem strength. The stock closed at $300.23 on May 15, with a 52-week high during the session of $303.20.

Year-to-date (YTD), Apple stock has gained 9.31%. Over the past 12 months, the stock is up 40.67%, driven by accelerating earnings growth, rising operating income, and growing enthusiasm around Apple’s AI roadmap.

The rally pushed Apple’s market value to $4.4 billion, cementing its position as one of the most valuable companies in the world. Importantly, the stock’s exit to a 52-week high on May 15 continued momentum as Wall Street focused more on Apple’s long-term earnings potential than the near-term iPhone development cycles.

The stock trades at a high 34.11 times forward earnings, compared to the industry average and its historical average.

Q2 Results Exceeded Expectations

AAPL reported strong fiscal results for the second quarter of 2026 on April 30, delivering record March quarter revenue, revenue, and iPhone sales as accelerating service growth and strong demand for the iPhone 17 lineup boosted profits across the business.

The company posted revenue of $111.2 billion in the quarter ended March 28, representing a 17% year-over-year (YOY) increase, while earnings per share rose 22% YOY to $2.01, beating expectations. Net income rose to $29.6 billion from $24.8 billion a year ago.

Job performance remained strong in almost all business segments. iPhone revenue increased 22% YOY to $57 billion, driven by strong global demand for the iPhone 17 family and record development activity. Management noted that the iPhone achieved record revenue for the March quarter.

Services revenue reached an all-time high of $31 billion, growing 16% YOY as the App Store, cloud, subscription, payments, advertising, and media businesses continued to grow. Importantly, Services now account for a larger portion of the company’s total revenue, highlighting Apple’s growing shift toward recurring revenue streams.

The Mac business generated $8.4 billion in revenue, up 6% YOY, while iPad revenue increased 8% YOY to $6.9 billion, and Wearables, Home and Accessories revenue increased 5% to $7.9 billion.

Profits improved significantly during the quarter despite ongoing supply chain pressures and memory costs. Gross margin grew to 49.3%. In addition, gross margin for services reached an incredibly strong 76.7%, while gross margin for Products stood at 38.7%.

Geographically, Apple delivered double-digit growth in all major regions, including sharp rebounds in Greater China and continued rapid growth in emerging markets such as India and Mexico.

In addition, management issued bullish guidance for the fiscal third quarter of 2026, predicting revenue growth of approximately 14% to 17% YOY despite ongoing supply issues associated with improved semiconductor availability and rising memory costs.

Apple also forecast gross margin between 47.5% and 48.5% while expecting Services revenue growth to remain comparable to Q2 levels. The guide expressed confidence that robust demand ecosystem, AI-driven device adoption, and continued expansion of Services will continue to support revenue growth throughout the remainder of 2026.

Furthermore, the consensus estimate of $8.74 for fiscal 2026 shows an increase of 17.2% YOY, before improving by about 9.2% year-over-year to $9.54 for fiscal 2027.

What Are Analysts Expecting for Apple Stock?

In addition to Evercore, Bernstein SocGen Group also raised its price target on AAPL to $350 from $340 while reiterating an “Outperform” rating following Apple’s strong fiscal second quarter results and positive guidance.

Also, Goldman Sachs maintained a “Buy” rating and a $340 price target on AAPL this month.

Overall, Apple stock has a consensus rating of “Neutral Buy”. Of the 42 analysts covering the tech giant, 23 recommend a “Strong Buy,” three give it a “Neutral Buy,” 15 analysts maintain a “Hold” rating, and one has a “Strong Sell” rating.

While the average analyst price of $308.19 suggests a 3.85% upside, the Street’s top price target of $400 suggests a roughly 34.8% upside.

As of the date of publication, Subhasree Kar had no (directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. This article was originally published on Barchart.com