1 Reason Apple Could Outperform in 2027
Key Points
Early demand for the iPhone Duo has been strong, even as iPhone 18 Pro demand looks softer.
Duo demand reinforces Apple's brand and its high-margin services ecosystem.
The stock isn't cheap, but steady growth and Duo sales could help it outperform.
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Apple (NASDAQ: AAPL) has outperformed the S&P 500 in 2026, up 28% year to date as of Oct. 22, 2026, compared with the index's 12% return. Apple's first folding phone, the iPhone Duo, looks like a success. Interest in the new model could help the stock outperform again in 2027. Here's why.
Online orders for the $1,999 Duo sold out quickly, pushing some deliveries to January, Reuters reported. Apple called preorder demand "extraordinary" ahead of the Oct. 23 release date. This is incredible demand for a consumer spending environment anchored by persistent inflation and elevated interest rates.
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That demand reinforces the brand. Apple has more than 2.5 billion active devices in people's hands and over 1.5 billion paid subscriptions.
Investors have historically paid a premium for Apple's steady financials, services growth, and brand power. In the fiscal third quarter (ended June 27, 2026), revenue climbed 16% year over year to $109 billion, with roughly half of revenue from the iPhone, and management guided to 9%-11% year-over-year growth for the quarter that ended in September.
There's another catalyst: Apple's new Siri AI, released in beta in September, offering a deeper chat experience for iPhone users. Siri's chat window will leverage the Duo's larger screen width, potentially becoming another sales driver for the Duo over the next year.
Image source: Getty Images.
Softer iPhone 18 Pro demand does pose a risk, but it may just reflect more people wanting to buy the Duo. The stock is also not cheap, trading at about 36 times analysts' fiscal 2027 earnings estimate. I believe Apple's brand power deserves a premium, but it still trades at roughly twice the S&P 500's forward earnings multiple.
Still, if the Duo attracts more customers to Apple's ecosystem, growth could beat the fiscal 2027 consensus earnings growth estimate of 8%, especially since strong iPhone sales could spur higher spending on high-margin services, boosting earnings. I believe strong demand for the Duo could maintain positive sentiment around the stock, setting up another year of outperformance in 2027.
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John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple. The Motley Fool has a disclosure policy.
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