Is Apple a good buy today? This is the single most important aspect of Apple’s story today.
Yesterday, we talked about Apple’s road to reaching a $5 trillion market cap, its AI strategy revamp to become the “wall socket” rather than the “power plant,” and why its overhauled Siri AI, which is scheduled to start shipping next month, could make it a big consumer AI winner.
We ended with the question that matters most: Is the stock a buy right now?
To answer that, we need to discuss the forces colliding right now that will drive Apple’s story (and stock price) over the next couple years.
AI can significantly enhance Apple’s lucrative position as a “toll collector,” but this position is being attacked in new ways.
I think the single most important aspect of Apple’s story today is this: It does not have to “win” AI to make a fortune from AI.
Let me show you what I mean…
Google pays Apple an enormous amount of money to be the default search engine on Apple devices. Unsealed court documents from Google’s antitrust trial revealed that payment reached $20 billion in 2022 alone. And a witness let slip that the arrangement hands Apple about 36% of the search-ad revenue Google generates through Apple’s Safari browser.
Apple doesn’t disclose the current figure, but nobody thinks it’s shrunk since 2022.
Analysts have estimated that this deal with Google accounts for more than 15% of Apple’s annual operating profit. And it costs Apple almost nothing to produce. It’s a toll.
When you think about it, much of Apple’s business revolves around tolls.
The App Store is a toll: Any company that wants to sell an app (or sell something inside an app) to iPhone users must go through the app store and give Apple a cut (typically 15% to 30%) of the sale.
Apple Pay is a toll: When you tap your iPhone to pay for something, Apple takes a small slice of that transaction. The bank or the store pays Apple for using its payment system. Again, Apple is collecting a fee simply for controlling the bridge.
Advertising is a toll: Companies that want to put ads in front of Apple users (inside the App Store, in apps, or anywhere else in Apple’s world) must pay Apple for that access. Apple sells the digital space where the ad is placed and pockets the cash.
Every subscription billed through an iPhone is a toll for the same reason. If Netflix, Spotify, or any other service charges you through the App Store, Apple takes its percentage of that monthly or yearly payment (every time it renews). The service is paying Apple just to collect money from customers who use Apple’s devices.
Apple doesn’t invent the apps, process the payments, create the ads, or run the subscription services. It simply owns the only bridge countless folks use, so it collects a fee from whoever wants to cross it.
That’s why Apple’s installed base of 2.5 billion active devices provides such a strong, durable moat.
You can think of these devices like the biggest private road system in the world. Hundreds of millions of people use it every day. Once someone is driving on those roads—with their photos in iCloud, their apps bought from the App Store, their family sharing set up, and their payment methods saved—it’s expensive and annoying to switch to another road system. That stickiness is powerful.
Because so many people are already on Apple’s roads, other companies are willing to pay Apple for access. Developers pay the App Store cut. Advertisers pay for ad space. Google pays to be the default search engine. Banks and stores pay for Apple Pay. All these tolls only exist because the roads are so crowded and hard to leave.
AI extends and enhances this “toll collector” business model.
Think about what an AI assistant actually needs to be useful. It needs to know you. It needs permission to act on your behalf. And it needs a way to get paid.
Apple already owns all three of those things across 2.5 billion devices.
Meanwhile, all the AI companies spending hundreds of billions of dollars racing to build the best AI models need to reach consumers. And the largest, wealthiest, most engaged group of consumers on the planet is already driving on Apple’s roads.
That’s why Apple doesn’t need to “win” AI to make a fortune from AI. It doesn’t even need to run the race.
The AI buildout is the most capital-intensive project in corporate history. Apple captures a slice of the consumer revenue without needing to fund it.
Now think about how the new revamped Siri AI could grow this opportunity.
Today, Siri answers. Starting next month, Siri acts. And an assistant that acts sits in a completely different place than one that just answers.
You say, “Siri, we’re out of coffee, order the usual.” Siri opens the correct app, finds and places your usual order, and pays with Apple Pay.
Or you say, “Siri book us a table somewhere good Friday at 7.” Siri checks your calendar, checks the restaurant’s app, and makes the reservation.
Each of those actions used to involve a couple minutes of you tapping around on your device, and several chances for you to wander off Apple’s roads onto someone else’s. Now the whole trip stays on Apple’s pavement. Apple’s assistant. Apple’s permission system. Apple’s payment rails. Apple’s billing relationship with you.
But it’s important to recognize that Apple’s tolls are under attack in a way they weren’t a few years ago.
Consider the App Store, for example. Apple is now barred from collecting any fee on US “link outs,” which is when a developer puts a link inside their app that sends you to their own website to pay. Under the old way, if you wanted to subscribe to Spotify, then Spotify had to run that payment through Apple and hand over a cut. Now it can simply point you to its own site and Apple gets nothing.
That change didn’t come willingly. A judge ordered Apple to allow those links a few years ago. In 2025 she found the company had obeyed the letter of her order while gutting its spirit and held Apple in contempt. The Ninth Circuit appeals court agreed with her. Apple appealed again, and the Supreme Court has agreed to hear the case. On the July earnings call, Apple’s CFO reminded everyone that the company is still operating under that ruling in the meantime.
So some of the highest-margin money Apple makes is now optional for the companies paying it.
The $20 billion plus Google search payment we talked about earlier now has its own cloud of uncertainty because it depends on how Google’s ongoing antitrust case ultimately plays out.
None of this means the tolls are disappearing. Courts move slowly and Apple has plenty of room to restructure its fees rather than lose them outright. But five years ago these arrangements were simply facts of life. Today, they’re contested. And a meaningful chunk of Apple’s future profits depend on decisions the company doesn’t get to make.
The sky high prices and shortages we’re seeing in the memory and storage markets add more uncertainty to Apple’s story.
The bill for the AI boom arrives at Apple’s door
Because they’re willing to pay almost anything, AI data centers are eating up the world’s supply of memory and storage—two things every Apple device needs too.
The numbers are staggering. According to research firm TrendForce, conventional DRAM (memory) contract prices rose 90% to 95% in the first quarter of 2026 alone. Then another 58% to 63% in the second quarter. NAND (storage) rose 70% to 75% in the second quarter.
Here’s the irony: Apple is *not *spending hundreds of billions of dollars a year building AI data centers like Amazon, Google, and the other hyperscalers. That’s the whole wall-socket-not-power-plant decision we talked about yesterday. But Apple is paying for this buildout anyway because when the hyperscalers bid up the price of memory, that increases the cost of building your iPhone.
You can see it in Apple’s margins.
Gross margin is a simple idea: out of every $100 Apple collects, how much is left after paying to actually make and ship the product. Strip out a one-time tariff refund, and Apple’s gross margin compressed from 49.3% in the March quarter to 48.1% in the June quarter. The company guided to about 46.5% for the September quarter.
On the July earnings call, Apple’s CFO said memory costs explain more than100% of the shrinking gross margin. That means everything else in the business was improving, but memory costs alone were heavy enough to drag it down anyway.
Apple has already raised prices on some Macs and iPads by $200 or more. And the cushion is running out. Apple stocked up on memory earlier, at lower prices, and has been softening the blow to customers and its margins by working through that cheaper inventory. CEO Tim Cook said this benefit shrinks after September, while memory prices will keep climbing.
This is an important and underappreciated aspect of Apple’s story right now. The AI boom is currently a cost for the company. It’s not a growth driver… yet.
So, is Apple a buy today?
At about 36, its P/E ratio is very high in historical terms. That doesn’t leave much (if any) room for error. At 16 times earnings, Apple could disappoint you in three different ways and still make you money. At 36, the story must be right and management must execute almost flawlessly.
What’s more, management is guiding for year-over-year revenue growth down to 9% to 11% next quarter. Gross margins are shrinking on memory costs, with the inventory cushion fading. The revamped Siri still hasn’t shipped yet. And on September 1, a new CEO takes the wheel of a company that’s had the same driver for 15 years.
On the other side of the ledger: This is one of the greatest businesses ever assembled. 2.5 billion active devices. 1.5 billion paid subscriptions. A Services business growing double digits at about 75% gross margins. $135 billion in free cash flow over the past year. A viable AI strategy and architecture. Enormous tolls. And the owner of the ecosystem that potentially becomes the place where more than a billion people access and use AI every day.
Personally, I’d rather own Apple than not own it. But I definitely understand why you’d be on the fence at the current price.
Three things to look for relatively soon that would make the decision easier are:
- Siri shipping on schedule next month and actually working at scale in the real world
- Evidence that memory prices have peaked
- A Supreme Court outcome that leaves the app store toll intact
Regardless, Apple’s track record of success and its massive installed base of sticky customers have me calling it a buy today for long-term investors.
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