Mac sales fell 7 percent to $8.39 billion, lagging the $8.95 billion consensus after the release of updated MacBook Pro models equipped with the M4 chip in November. iPad revenue gained 6 percent to $8.6 billion, slightly above expectations, with Cook noting that half of the quarter’s iPad buyers were first-time owners.
The Wearables, Home and Accessories segment—which includes Apple Watch, AirPods and the Vision Pro headset—generated $11.49 billion, a 2 percent decline that missed the $12.04 billion estimate. Services revenue, encompassing subscriptions such as Apple TV+, iCloud storage, advertising agreements and AppleCare warranties, advanced 14 percent to $30.01 billion, roughly in line with forecasts and marking continued momentum for the company’s higher-margin recurring business.
Geographic Highlights
Greater China, which for Apple includes mainland China, Taiwan and Hong Kong, delivered one of the standout regional performances. Sales in the area rose 38 percent to $25.53 billion, driven largely by iPhone upgrades and customer migration from competing brands. Cook reported record levels of upgraders in mainland China as well as double-digit growth in so-called switchers.
While management did not break out figures for other regions during the earnings call, executives emphasized that overall growth was broad-based, though the China rebound was more pronounced than anticipated.
Margin Expansion and Cost Trends
Apple’s gross margin reached 48.2 percent, ahead of the 47.5 percent consensus, reflecting a favorable product mix and continued efficiencies in supply chain operations. Chief Financial Officer Kevan Parekh told analysts that memory component prices had only a minimal impact on the December quarter but warned of a more significant effect in the current period as global demand for AI-related hardware pushes component costs higher.
Capital expenditures totaled $2.37 billion, down from $2.94 billion a year earlier, while research and development expenses increased to $10.89 billion from $8.27 billion. Parekh said additional spending is expected as the company integrates artificial intelligence capabilities across its platforms. Earlier this month, Apple disclosed a partnership with Google to use the Gemini AI model for upcoming Apple Intelligence features, highlighting a strategic shift toward on-device AI processing.
Imagem: Internet
Outlook and Supply Constraints
For the fiscal second quarter, Apple forecasts revenue growth of 13 percent to 16 percent year over year, equivalent to a range of $107.8 billion to $110.66 billion. The midpoint of that guidance is above the $104.84 billion average analyst estimate. The company expects the Services segment to expand at a pace similar to the 14 percent recorded in the December quarter.
Management cautioned, however, that supply of certain iPhone models will remain constrained. Cook cited advanced chip manufacturing capacity as a primary bottleneck and added that the company is operating “in a supply chain mode” to keep up with elevated demand. According to Cook, balancing supply with customer interest remains difficult to predict in the near term.
Capital Return Program
Apple returned nearly $32 billion to shareholders during the quarter through share repurchases and dividends. The company did not outline any changes to its existing capital allocation strategy, which includes regular buybacks to offset share dilution and incremental dividend increases.
The ongoing repurchase activity underscores Apple’s confidence in its long-term cash generation, even as it commits more resources to AI and other emerging technologies. For context, Apple’s cash position and marketable securities remain substantial; public filings to the U.S. Securities and Exchange Commission show the company ended the quarter with tens of billions of dollars in liquidity.
Key Takeaways
• Revenue rose 16 percent to $143.76 billion, exceeding consensus expectations.
• Net income reached $42.1 billion, with earnings per share of $2.84.
• iPhone sales surged 23 percent to $85.27 billion, highlighting strong demand for the iPhone 17 lineup.
• Greater China revenue grew 38 percent, supported by record upgrades and new customer conversions.
• Gross margin expanded to 48.2 percent, while R&D spending increased to support AI initiatives.
• Guidance calls for 13-16 percent revenue growth in the current quarter amid ongoing iPhone supply constraints.
With a robust installed base, accelerating Services revenue and new investments in artificial intelligence, Apple enters the remainder of fiscal 2026 focused on scaling production to meet demand and managing rising component costs.
Crédito da imagem: Fabrice Coffrini | AFP | Getty Images
