11:49 AM EDT, 10/31/2025 (MT Newswires) -- Apple ( AAPL ) will benefit from multiple tailwinds heading into 2026 with an impressive gross margin upside, BofA Global Research said in a Thursday note.

BofA analysts said they expect a strong iPhone upgrade cycle in the coming quarters driven by the need for the latest hardware to enable generative artificial intelligence features. The analysts also noted that the AI-enabled version of Apple's ( AAPL ) virtual assistant Siri will be available in 2026, and a foldable iPhone is anticipated in September 2026.

The company's gross margins were stronger than expected in the last quarter at 47.2%, driven by better performance in Services and an improved product mix, despite a $1.1 billion negative impact from tariffs, the analysts said. For the December quarter, guidance was given at 47% to 48% inclusive of a $1.4 billion hit from tariffs, according to the note.

The analysts said the results and guidance are both "particularly strong" given the recent increases in component costs. They said the expect further margin upside moving into the March quarter and fiscal 2026, driven by diminishing tariff impacts and a higher mix of Services revenue.

BofA reiterated the company's stock rating at buy and raised the price target to $325 from $320.

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