Alejandro Jimenez Rico @MrKnoot: "🍎 𝗔𝗽𝗽𝗹𝗲 𝗷𝘂𝘀𝘁 𝗵𝗶𝘁 $𝟰..."

United Kingdom

🍎 𝗔𝗽𝗽𝗹𝗲 𝗷𝘂𝘀𝘁 𝗵𝗶𝘁 $𝟰 𝘁𝗿𝗶𝗹𝗹𝗶𝗼𝗻. 𝗪𝗵𝗮𝘁'𝘀 𝗱𝗿𝗶𝘃𝗶𝗻𝗴 𝘁𝗵𝗶𝘀? $AAPL (Apple) just crossed $4T in market cap. Despite the lack of Apple Intelligence. Despite being "slow on AI". Despite all criticisms. Apple just delivered record earnings. Again. Here's the highlights of the latest Q4 2025 earnings call: - Revenue: +8% YoY - Net income: +86.4% YoY! - Gross Margin increased 70 basis points, reaching 47.2% - EPS is up +13% YoY. This is outstanding numbers, even for Apple. And it sets new historical highs in all fundamental metrics we might care bout. 𝗪𝗵𝗮𝘁'𝘀 𝗱𝗿𝗶𝘃𝗶𝗻𝗴 𝗴𝗿𝗼𝘄𝘁𝗵? The top line is being driven by a non-stoppable growth in the hardware market. Remember the iPhone alone makes more than 50% of the company's total revenue. And the iPhone 17 series just launched and crushed it. Outperforming the iPhone 16 series by +14% and driving up total iPhone sales by +6% YoY. Mac figures are also through the roof. Apple is eating away PC market share, by leveraging the absolute superiority of their M-chip silicon. Let's be honest, there's just nothing like it out there. If you need a non-gaming laptop, there's just no competition. Any other purchase that's not a MacBook is gonna feel like a mistake. Consumers know that, and that's why Mac sales have risen +13% while the total laptop market has only risen +4%. iPad and wearables are relatively flat. But the newest product just launched late in Q4, so their true impact should be seen on Q1 2026. That said, these remain a small chunk of the total Revenue. What about software? Apple discloses a "Services" section that includes all sorts of subscriptions like Apple Music, iCloud, Apple TV, Apple Arcade, etc. And it is up +15% YoY, reaching a new all-time high. This "Services" alone is a $100B ARR business with a 50% gross margin, and more than a billion paid subscribers. And this will only accelerate as more people are buying Apple hardware and falling into the Apple's ecosystem. 𝗧𝗵𝗲 𝗲𝗰𝗼𝘀𝘆𝘀𝘁𝗲𝗺 𝗮𝗱𝘃𝗮𝗻𝘁𝗮𝗴𝗲 Every device and service reinforces the others. An iPhone owner subscribes to Apple Music, buys an Apple Watch, uses iCloud storage. This yields an installed device base that's the largest in Apple's history. Think about this: iPhone retention rate is over 90%! Nearly nobody who buys an iPhone will ever switch to Android. Ecosystem lock-in grants Apple insulation from competitors. A user heavily invested in Apple services and hardware is less likely to switch. Even at premium prices, Apple delivers value that keeps customers spending within its walled garden. 𝗧𝗵𝗲 𝗰𝗮𝘀𝗵 𝗺𝗮𝗰𝗵𝗶𝗻𝗲 Throughout 2025, Apple repurchased $90.7 billion in stock and paid $15.4 billion in dividends. Over $100 billion returned to shareholders. Share count dropped from 15.2 billion to 14.8 billion, amplifying EPS. Despite returning all that cash, shareholders' equity rose to $73.7 billion from $57.0 billion. Apple generates enormous free cash flow. It can return cash and still invest in the business. 𝗧𝗵𝗲 𝗔𝗜 𝗾𝘂𝗲𝘀𝘁𝗶𝗼𝗻 Apple has been perceived as an AI laggard. Relatively quiet about ChatGPT-like products. But Apple's AI strategy focuses on on-device intelligence. Their focus is not really on AI-focused software. But on AI-focused hardware. Their chips line-up, both for Mac and iPhone, is top-notch when it comes to in-device AI performance, and Apple is working hard on facilitating developers to tap into these resources. Both in iOS applications with user-facing AI and by using Macs to train and scale AI models, with their underrated MLX project. Moreover, reports indicate Apple is working on a major AI upgrade to Siri, delayed until 2026 to ensure privacy. The word is out that this upgrade will come with the assistance of $GOOG (Alphabet) and their Gemini team, though. Which is not super promising when it comes to Apple's capabilities of high-end AI software development. But it will allow them to not be left behind while they do their own homework. Apple's strategy is obviously to integrate AI organically into devices and services. Rather than releasing a standalone chatbot. Apple's main value proposition in this AI race is to guarantee users privacy and data security. And their private cloud server shenanigans is honestly the best idealisation of what private, user-owned and safe cloud computing that could someone imagine. Even if they partner with $GOOGL (Alphabet Inc Class A) to deliver the model, the mode will need to be in Apple's servers. 𝗖𝗼𝗻𝗰𝗹𝘂𝘀𝗶𝗼𝗻 Apple's Q4 2025 results show a company firing on all cylinders. Growing revenue, widening margins, leveraging technology advantages across a flourishing ecosystem. Not hyper-growth, but reliable expansion with high returns on capital.

Not investment advice. The author may have financial interests in the mentioned instruments.

3 Mentioned

AAPL

Apple

GOOG

Alphabet

GOOGL

Alphabet Inc Class A

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