Why Apple (AAPL) Stock Could Outperform Despite Trading Below $270

TLDR

• Apple stock trades below $270 after posting 15.7% revenue growth in Q1 2026, driven by 23.4% jump in iPhone 17 sales
• Earnings estimates revised upward with current quarter EPS expected at $1.88, up 13.9% year-over-year
• Company maintains 29.3% net income margin and beat consensus estimates in each of the last four quarters
• Stock trades at P/E ratio of 33.1 with Zacks Rank #2 (Buy) rating despite concerns about cautious AI approach
• Analysts project fiscal year 2026 revenue of $461.12 billion, representing 10.8% growth from prior year

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Apple (AAPL) stock hovers below $270 following a strong fiscal first quarter that saw revenue climb 15.7% year-over-year to $143.76 billion. The tech giant continues to demonstrate financial strength even as investors debate its current valuation.

Apple Inc., AAPL

The iPhone 17 lineup drove the impressive quarter. Sales jumped 23.4% compared to the same period last year. This performance beat Wall Street expectations, with reported revenue coming in 4.32% above the consensus estimate of $137.81 billion.

Earnings per share reached $2.84 in Q1, up from $2.40 a year ago. The result topped analyst estimates by 7.17%. Apple has now beaten consensus EPS projections for four consecutive quarters.

The company’s profitability remains exceptional. Net income margin hit 29.3% in the latest quarter. This reflects Apple’s pricing power and operational efficiency across its product ecosystem.

Analyst Outlook Improves

Wall Street analysts have been revising their estimates higher. The consensus EPS estimate for the current quarter stands at $1.88, representing 13.9% growth. Over the past 30 days, this estimate increased 5.3%.

For fiscal 2026, analysts expect earnings of $8.41 per share, up 12.7% from the prior year. That estimate has risen 3.1% in the last month. Fiscal 2027 projections point to $9.29 in earnings, a 10.4% increase.

Revenue forecasts also look healthy. Analysts predict $108.88 billion for the current quarter, a 14.2% year-over-year gain. Full-year fiscal 2026 revenue is expected to reach $461.12 billion, up 10.8%. Fiscal 2027 revenue estimates sit at $494.55 billion.

Valuation Questions Persist

The stock carries a price-to-earnings ratio of 33.1. Some analysts question whether this valuation leaves room for upside. With an annualized profit base of $168 billion in Q1, sustaining double-digit earnings growth may prove challenging.

Apple’s cautious approach to artificial intelligence has raised eyebrows. Critics argue the company lags behind competitors in the AI race. Delayed updates to Siri haven’t helped investor sentiment.

Zacks Investment Research assigned Apple a Value Style Score of F. This indicates the stock trades at a premium compared to industry peers. The rating system evaluates both traditional and unconventional valuation metrics.

Despite valuation concerns, Zacks gives Apple a Rank #2 (Buy) rating. This reflects the power of upward earnings estimate revisions. The rating suggests potential near-term outperformance versus the broader market.

Over the past month, Apple shares returned 0.1% while the S&P 500 fell 1.7%. The stock trades well below its 52-week high of $288.62. Its current dividend yield sits at 0.41%.

Customer loyalty remains one of Apple’s biggest assets. The brand commands pricing power that few competitors can match. Gross margin reached 47.33% in recent results.

Apple stock last traded at $255.98 as of February 13, 2026. The company’s market capitalization stands at $3.8 trillion.

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