Apple is a Triple Threat in Terms of Positive Catalysts
While Microsoft pours over $100 billion into data centers, Apple barely lifts a finger on AI spending, and one investor keeps buying anyway. But a rising cost inside every iPhone could still crack the story.
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I added to my Apple (NASDAQ:AAPL | AAPL Price Prediction) position again after the November 2 earnings report. Apple spends little on AI infrastructure, it compounds cash at a rate few companies match, and its customers stay locked inside its ecosystem. In uncertain markets, I want that trio compounding in my retirement account.
Locked-In Customers Pay Me Every Quarter
Apple’s installed base now tops 2.5 billion active devices, an all-time high. That base supports more than 1.5 billion paid subscriptions, which grew by double digits last quarter. It also feeds Services, which hit a record $31.6 billion in the September quarter. That was up 10%, at a 76% gross margin, while products earned 37.2%. Every device Apple sells opens another door to its most profitable business.
Hardware keeps those doors opening. iPhone revenue rose 17% to $57.6 billion, a September quarter record, and Mac climbed 24% to $10.8 billion. CEO John Ternus called the new iPhone Duo “the most transformational iPhone since the original,” and management says supply still can’t keep up with demand.
Cash Compounding Does the Heavy Lifting
In fiscal 2026, revenue reached $478.83 billion, up 15.06%, and EPS came in at $8.98, up 20%. Operating cash flow rose 30.15% to $145.10 billion while capex fell 28.9% to $9.04 billion. Apple returned $28 billion to shareholders in the September quarter alone, including $24 billion of buybacks. Earlier this year, the board also authorized another $100 billion in repurchases. Return on invested capital stands at 61.56%, and the latest quarter marked Apple’s 10th consecutive EPS beat.
How Apple’s Capex Discipline Outshines Microsoft
Friends usually ask how Apple compares with Microsoft (NASDAQ:MSFT). My answer is capex. In fiscal 2026, Microsoft spent $115.95 billion on capital expenditures, up 79.62%, and its free cash flow fell 6.46% to $66.99 billion. Its September quarter capex alone reached $39.37 billion. Apple spent $9.04 billion over its entire fiscal year. Microsoft trades at roughly 59 times free cash flow with a 1.7% free cash flow yield. Apple trades at 37 times free cash flow, with a 2.73% yield.
Apple lets others pour concrete for data centers while it sells the devices people use to reach AI. Siri AI launched in beta in September and added five more languages in October. Management has also said customers may be able to buy expanded server-side access in the future.
Memory Costs Could Squeeze My Returns
Memory costs worry me most. Management guided December quarter gross margin to 45% to 46%, below the 47.9% it just reported. That 47.9% also included roughly one percentage point from one-time tariff refunds. Memory purchase obligations rose $33 billion between the June and September quarters. On Friday, Daiwa warned that Apple’s run of outperformance could end soon. At 38 times earnings and a 0.32% dividend yield, I have little buffer if margins decline further.
My thesis holds because memory pricing runs in cycles, while the installed base and Services keep building year after year. Apple has already raised prices on iPhone, Mac and iPad. The December quarter is also expected to be its best revenue quarter ever, with growth of 7% to 10%.
Catalysts That Could Drive Apple’s Next Leg
Shares are up 26.28% year to date, and my reasons for holding them have only gotten stronger. iPhone Duo supply should catch up with demand, and Siri AI opens a new way for Apple to make money. Services is guided to grow 8% to 9% this quarter. Apple remains a company that holding its customers, pays for its own future and hands the excess cash back to shareholders.
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Alex Sirois is a financial writer with experience spanning both retail and institutional investing. He has written for InvestorPlace and held roles at BNY Mellon and Bernstein, giving him a perspective that bridges Main Street portfolios and Wall Street analysis.
Alex holds an MBA from George Washington University and has built his career across multiple industries, including e-commerce, education, and translation — a breadth of experience that informs how he breaks down complex financial topics for everyday investors. His writing is conversational, actionable, and grounded in long-term, buy-and-hold investing principles.
At 247 Wall St., Alex focuses on delivering analysis that is both accessible and useful, with a clear emphasis on helping readers make more informed decisions with their money.
