Written by: Rita

At Monday's close, Apple's market capitalization returned to the top globally, approximately $4.93 trillion, surpassing Nvidia's $4.78 trillion. Nvidia fell nearly 5% that day while Apple rose more than 1% against the trend.

In the past month, Apple outperformed the Nasdaq 100 Index by 23 percentage points, marking the largest monthly excess return since 2005. The market is repricing one thing: as AI capital expenditures grow larger, not burning money has become an advantage.

Goldman Sachs raised its target price for Apple from $330 to $370 in anticipation of its third-quarter earnings report on July 27, maintaining a buy rating. Goldman Sachs expects third-quarter EPS to be $1.93, exceeding the market consensus of $1.89, with iPhone revenue growing 23% year-over-year to $54.8 billion and Mac revenue increasing 15% to $9.3 billion. The basis for this judgment is Goldman Sachs's confidence in Apple's "light capital expenditure, stable profit output" model.

Google Spends Money, Apple Saves Money

Google's parent company Alphabet raised its 2026 capital expenditure guidance to $195 billion to $205 billion last week, directly causing negative free cash flow in the second quarter. This is the first time since its IPO in 2004. Tesla is also expanding its spending. Both companies’ stock prices plummeted after their earnings reports.

Apple is taking another path. Goldman Sachs data shows Apple’s capital expenditures have consistently declined over the past three quarters. In AI, Apple pays Google about $1 billion annually in licensing fees to use a customized Gemini model for Siri's AI upgrade, avoiding the huge cash burn of training large models.

Jay Woods, Chief Market Strategist at Freedom Capital Markets, stated that Apple was criticized for not investing more in AI, but has now successfully avoided some of the capital expenditure traps. Over the past 12 months, the market's pricing logic for AI infrastructure stocks has been "the more you spend, the more valuable you are," with Nvidia skyrocketing from $200 to $600. But now, the CDS market is starting to warn of credit risk, Google’s FCF turning negative, and the market is beginning to realize: spending a lot does not guarantee profits, while spending less can be safer.

Android Prices Rise, Apple Gains Market Share

With the price increase in storage chips, Android manufacturers collectively raised prices, with Samsung, Xiaomi, vivo, and OPPO all affected. Apple also faces cost pressures, but due to brand loyalty and ecosystem stickiness, it has actually gained market share amidst the price increase tide. Bernstein analyst Stacy Rasgon pointed out that iPhone's global market share has risen from 17% a year ago to 20% against the trend.

The price increase strategy of Android manufacturers is backfiring. When the entire industry is forced to raise prices, the brand with the highest customer loyalty becomes the "relatively inexpensive" choice. Goldman Sachs data shows that Apple's share in the Chinese market has increased by about 4 percentage points year-over-year to 18%, coinciding with the period in which local Chinese brands collectively raised prices.

Apple's own price adjustments are also progressing. The iPhone 17 Pro and iPhone Air have eliminated the entry-level 128GB version, effectively lowering the starting price by $100. Mac and iPad underwent an average price increase of over 20% on June 26. Goldman Sachs believes that Apple users are less price-sensitive than Android users, and with carrier subsidies and the safety net of low-priced models, the impact of price increases on demand is limited.

Service revenue is also providing support. The growth rate of the App Store has slowed to 3%, but the growth of iCloud+ and AppleCare+ is compensating. Goldman Sachs expects Apple’s services revenue to compound at about 12% annually over the next few years, and the slowdown of the App Store will be offset by growth in other categories.

Thursday's Earnings Report is a Key Verification

Apple currently has a price-to-earnings ratio of over 30, far exceeding the S&P 500's 22. Dan Niles, founder of Niles Investment Management, warned that if Thursday's earnings report shows semiconductor price increases eroding profit margins, Apple may face pressure. Gross margin is the key metric that Goldman Sachs is focused on in this report, estimating it to be 48.2%, slightly higher than the market expectation of 48.1%. The price increase of storage chips has already impacted the entire mobile phone industry; whether Apple can maintain its gross margin while protecting market share is the core focus of this earnings report.

Thursday's earnings report will also be the last performance meeting hosted by Tim Cook as CEO. On September 1, he will officially hand over the reins to hardware engineering veteran John Ternus. What he leaves to his successor is not only a record market capitalization report but also a narrative being repriced by the market: in the AI era, restraint itself is also a competitive advantage.

Disclaimer

This article is a整理与解读 of third-party broker research reports (Goldman Sachs, July 27, 2026) by Chao Xiang Research, combined with整理 of public market information. The ratings, target prices, earnings forecasts, and related judgments cited in the text are the opinions of the analysts from that brokerage and represent the position of their respective agency, not the views of Chao Xiang Research, and do not constitute any investment advice.

The market has risks, and decision-making should be independent. This article should not be used as a basis for buying or selling any securities.