Apple: With Launch of Foldable iPhone Duo, Things Look Twice as Nice

Key Morningstar Metrics for Apple Fair Value Estimate : $290.00 Morningstar Rating : ★★ Morningstar Economic Moat Rating : Wide Morningstar Uncertainty Rating : Medium On Oct. 13, Apple AAPL unveiled a suite of smart home devices, highlighted by the HomeView smart speaker with display. The portfolio includes other cameras, thermostats, a doorbell, and a deadbolt lock. Apple also updated its HomePod Mini smart speaker and its Apple TV 4K hardware.

Why it matters: This is Apple’s first full-fledged push into smart home, and we like the lineup. It follows Apple’s pattern of being a premium follower in new product categories. While we don’t see any groundbreaking features, the biggest selling point is integration into Apple’s software ecosystem.

This is Apple’s latest push into artificial intelligence, with Siri AI as a core piece of each of these products. We like Apple expanding its shots on goal for personal AI and continue to see it as the preeminent device maker via which consumers can use AI. We expect tight integration to defend Apple against likely device threats from frontier model makers like OpenAI.

This is the key timing. Apple doesn’t need to compete at the model frontier; it only has to make connected devices that users love to use, locking them in. These fit the bill, in our view.

The bottom line: We maintain our $290 fair value estimate for wide-moat Apple. We’ve raised our growth estimates for home accessory revenue, but this has a negligible impact on our valuation. The shares remain moderately overvalued to us.

We estimate home accessory revenue at about 1% of Apple’s total revenue, making it a small contributor to results. We expect higher growth now and believe the value these devices provide in Apple’s overall stickiness and AI competitiveness is much higher than total sales would indicate. Nonetheless, iPhone revenue and gross margin are the key drivers for investors heading into fiscal 2027.

We expect strong, pricing-led iPhone growth to carry the top line, and we expect pricing to help offset memory inflation and keep gross margin compression to about 100 basis points year on year. Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research. The author or authors do not own shares in any securities mentioned in this article.

Find out about Morningstar’s editorial policies .

Source: Morningstar