Apple stock gains after "remarkable" margin guidance

Apple on Thursday posted records for total company revenue and profit per share, as iPhone sales grew more than 20% for a second straight quarter. This is the tech giant’s first quarterly report since surprising Wall Street with a CEO transition announcement.

Shares rose more than 3% following the market open on Friday after management guided to 14–17% revenue growth for the second quarter, alongside what Morgan Stanley described as "remarkable" gross margins outlook - 47.5–48.5%.

Analyst Eric Woodring said Apple delivered "an impressive quarter and guide" while both outlooks came in ahead of buyside bullish expectations.

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The Cupertino, California-based company earned $2.01 per share on revenue of $111.18 billion in its fiscal Q2 2026. Analysts had expected a profit of $1.93 per share on revenue of $108.92 billion.

Despite the concerns around Apple’s AI ambitions, the world’s third-largest company by market cap has recaptured momentum in its core business of smartphones. Last quarter saw the tech titan’s best iPhone sales performance in over four years, and the trend continued this quarter as well.

iPhone sales in fiscal Q2 jumped 21.7% Y/Y to $56.99 billion. In Q1, sales had risen 23.3%, marking the biggest increase since Q4 2021.

Consumers have embraced the company’s latest iPhone 17 models, especially the premium Pro devices. According to Counterpoint research, AAPL led the first quarter of a year in market share for global smartphone shipments for the first time ever.

"iPhone achieved a March quarter revenue record, fueled by such extraordinary demand for the iPhone 17 lineup," AAPL CEO Cook said in a statement, adding that this was the firm’s overall best March quarter yet.

Apple, like many other smartphone players, is grappling with memory chip crunch issues. Major rival Samsung Electronics on Thursday said its mobile and network division will see profitability fall this year, adding that it expects the severe memory supply shortage to deepen in 2027.

"Continued strong customer demand for our products and services once again helped us achieve a new all-time high for our installed base of active devices across all major product categories and geographic segments," AAPL chief financial officer Kevan Parekh said.

Sales of Apple’s Mac rose 5.7% Y/Y to $8.40 billion, while revenue from iPad improved 8% Y/Y to $6.91 billion. Apple’s wearables, home and accessories segment saw revenue climb 5% Y/Y to $7.90 billion.

Apple’s Services segment, which includes online subscriptions such as iCloud, Apple Music, as well as fees collected from the App Store, saw sales growth of 16.3% Y/Y to $30.98 billion.

"During the quarter, Services achieved yet another all-time record, and we were excited to introduce remarkable new products to our strongest lineup ever. That included the addition of the iPhone 17e and the M4-powered iPad Air, along with the launch of MacBook Neo, which is captivating customers all around the world,” top boss Cook said.

Jacob Bourne, senior tech analyst at Emarketer, called it a "standout quarter" and said the Services segment continued to "oil Apple’s financial machinery, serving as a testament to Tim Cook’s legacy"

"iPhone revenue came in just shy of expectations, but strength across Mac, iPad, and Wearables helps offset the miss. The results suggest Apple is continuing to weather the global memory chip crunch, pointing to the tech giant’s supply chain resilience," he said.

Ten days ago, Apple said current top boss Tim Cook will become chairman of the board and will be replaced by veteran insider John Ternus. The move was a sudden one for analysts and investors, sparking concerns that Cook was stepping down at a time when the company was facing lack of visibility in terms of turning artificial intelligence into a revenue driver.

"The question is whether incoming CEO John Ternus can translate this momentum into a credible AI strategy, particularly as the Google Gemini partnership for Siri signals Apple’s willingness to lean on external AI innovators," Bourne added.

The analyst was referring to Apple’s agreement with Alphabet’s Google announced in January, under which AAPL will fold the company’s Gemini artificial intelligence model into its handsets’ Siri assistant and other Apple Intelligence features. The move had been seen as one of the biggest shifts to date in Apple’s AI strategy.

"Investors will be watching for clues about how Ternus plans to balance Apple’s cautious AI posture with the pressure to define the next consumer device for the AI era, particularly as expectations about the iPhone’s performance are getting harder to meet," Bourne said.

Apple’s results come at a time when AI spending plans are being closely scrutinized. Four of AAPL’s fellow Magnificent 7 club members on Wednesday delivered a mixed bag of results, with Alphabet, Microsoft, and Meta in particular outlining more expenditures for AI.

The tech behemoth’s quarterly report also comes two days after the overall tech sector took it on the chin due to concerns around AI leader OpenAI’s growth. A Wall Street Journal report that the ChatGPT-developer recently missed its own targets for new users and revenue, citing people familiar with the matter, weighed on sentiment.

The iPhone-maker also authorized an additional $100 billion share buyback.

News.Az 

By Faig Mahmudov