Apple just printed $143.7 billion in a single quarter — the biggest in the company's history. Revenue up 16% year-over-year. EPS of $2.84, crushing the $2.71 consensus. And $AAPL is trading roughly 8% below its January peak.
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The disconnect has a name: Warren Buffett.
The Buffett Exit Keeps Going
Berkshire Hathaway's Q4 2025 13F dropped this week, and it confirmed what everyone suspected. Buffett sold another 10.3 million Apple shares in his final quarter as CEO — about 4% of Berkshire's remaining stake.
This isn't new. Berkshire has been trimming Apple since late 2023. The position that was once worth $175 billion is now roughly $60 billion. That's a two-thirds reduction in dollar terms.
| Period | Action | Remaining Stake |
|---|---|---|
| Peak (2023) | Full position | ~$175B |
| Q1-Q3 2024 | Heavy selling | ~$100B |
| Q4 2024 | Continued trimming | ~$75B |
| Q4 2025 | Sold 10.3M shares | ~$60B |
Buffett never explained why. He didn't need to. When the most famous buy-and-hold investor in history spends two years methodically reducing his largest position, the selling is the statement.
Record Numbers, Real Problems
The Q1 FY2026 results were objectively excellent:
| Metric | Q1 FY2026 | YoY Change |
|---|---|---|
| Revenue | $143.7B | +16% |
| Net Income | $42.1B | — |
| EPS | $2.84 | Beat by $0.13 |
| Gross Margin | ~45% | Stable |
| Services Revenue | $30B+ | — |
| Cash & Securities | $160B+ | — |
The iPhone 17 super-cycle is real. Services crossed $30 billion in a quarter. The balance sheet has $160 billion in cash. By every traditional measure, this is a company firing on all cylinders.
But traditional measures aren't what's spooking the market.
Three Fronts, Zero Easy Answers
The DOJ antitrust trial. Filed in 2024, still in discovery, trial expected in 2027. The focus: App Store exclusivity, iMessage lock-in, the "green bubble" problem. If Apple loses, forced opening of the App Store could gut Services margins — and Services is the growth story Wall Street is paying 30x earnings for.
The FTC's new pressure. Last week, FTC Chairman Andrew Ferguson fired off a letter to Tim Cook accusing Apple News of suppressing conservative publications. It's not an antitrust case — yet. But it signals that Apple now has regulatory heat from both the DOJ and the FTC simultaneously. In Europe, the EU has already slapped Apple with €500 million in anti-steering fines under the Digital Markets Act.
Memory costs are surging. DRAM and NAND prices have jumped 40-50% over the past year. Apple's gross margins held at 45% this quarter, but the company is absorbing component inflation that will squeeze harder as the year goes on. The iPhone 17e — Apple's budget AI-capable phone launching later this month — will be the first real test of whether Apple can maintain margins while pushing into lower price points.
The AI Question Nobody's Answering
Here's the thing about Apple and AI: the company is spending far less than its peers on infrastructure, and that was actually a tailwind when the AI trade started wobbling late last year. Meta, Amazon, and Alphabet are pouring hundreds of billions into data centers. Apple is running AI on-device.
That strategy makes Apple look disciplined when AI capex is the market's biggest fear. But it also means Apple Intelligence is behind. Siri is still playing catch-up. The "Liquid Glass" iOS 26 revamp promises screen awareness and personal context, but users have been hearing about Siri upgrades for years.
The Vision Pro hasn't moved the needle on revenue. The rumored "iPhone Flip" foldable is a 2026 event at the earliest. Apple's R&D is leaning into health tech — non-invasive glucose monitoring in the Apple Watch — which is genuinely exciting but years from material revenue contribution.
The Bull Case
Wall Street consensus sits at roughly $315, with Wedbush at $350. That implies 20-35% upside from current levels. The thesis is straightforward: 2.5 billion active devices, best-in-class margins, a Services business growing into a higher-margin mix, and an iPhone super-cycle that still has legs.
Apple doesn't need to win the AI infrastructure race. It just needs to make AI features good enough to drive upgrades. The installed base does the rest.
The Bear Case
Buffett sees something. He's been the most important Apple bull for a decade, and he's spent two years walking away. The regulatory walls are closing in from multiple angles. Memory inflation is real. China — once Apple's growth engine — is still soft, with Huawei eating share in the premium segment.
And the valuation isn't cheap. At roughly 30x forward earnings for a company growing revenue mid-teens, there's not much room for error. If Services margins compress because of antitrust rulings, the multiple reprices fast.
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Bottom Line
Apple just posted the best quarter in corporate history. The stock yawned. Buffett kept selling. The DOJ and FTC are both circling. Memory costs are rising into what's supposed to be a margin expansion year.
This is the tension: Apple the business has never been stronger. Apple the stock is priced like everything has to go right. If the regulatory picture clears and the iPhone 17e cycle delivers, the bears will look foolish. But at $260 with Buffett heading for the exit, "everything goes right" is a lot to ask.
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