Apple reported 17% revenue growth, tops estimates

Source Credit : Portfolio Prints

Apple Inc. delivered a stronger-than-expected outlook for the current quarter after surpassing Wall Street estimates on both revenue and earnings in its fiscal second quarter, sending the stock up roughly 3% in after-hours trading.

The lone weak spot in the report came from iPhone sales, which missed expectations for the second time in three quarters—an otherwise rare blemish in an earnings release that broadly beat forecasts.

Overall revenue rose 17% year over year to $111.6 billion, marking a robust acceleration from the $95.4 billion reported a year earlier. The results also marked the company’s first earnings release since the announcement that Tim Cook will step down after 15 years at the helm.

Looking ahead, Apple projected June-quarter revenue growth of 14% to 17%, well above analyst expectations of roughly 9.5% growth to $103 billion, according to LSEG estimates.

Metric	Actual	Expected
EPS	$2.01	$1.95
Revenue	$111.18 billion	$109.66 billion
iPhone Revenue	$56.99 billion	$57.21 billion
Mac Revenue	$8.4 billion	$8.02 billion
iPad Revenue	$6.91 billion	$6.66 billion
Wearables, Home & Accessories	$7.9 billion	$7.7 billion
Services Revenue	$30.98 billion	$30.39 billion
Gross Margin	49.3%	48.4%

The board also underscored confidence in the company’s trajectory by authorizing an additional $100 billion share repurchase program and raising its quarterly dividend by 4% to $0.27 per share.

iPhone revenue grew 22% year over year, even as supply constraints weighed on shipments. Like much of the consumer electronics sector, Apple continues to grapple with tight component availability—particularly memory—amid surging demand driven by artificial intelligence infrastructure. Both Meta Platforms and Microsoft recently flagged rising memory costs as a key factor behind increased capital expenditure plans.

Tim Cook described the iPhone 17 lineup as the “most popular in our history,” emphasizing that the company exceeded its own guidance despite supply limitations. Chief Financial Officer Kevan Parekh confirmed that both iPhones and Macs were affected by component shortages during the quarter.

At the same time, management signaled that cost pressures are likely to intensify. While the impact of higher memory prices was minimal in the December quarter and modest in March, Apple expects a “significantly higher” cost burden in the current period.

“We believe memory costs will have an increasing impact on our business,” Cook said, adding that the company is evaluating a “range of options” to mitigate the pressure.

On the product front, Apple refreshed its lineup in March with the introduction of the iPhone 17e, updated iPad Air models powered by the M4 chip, and the MacBook Neo—a $599 entry-level laptop aimed at students and budget-conscious consumers.

Beyond the quarter’s results, investor attention is increasingly shifting to leadership transition. John Ternus, a longtime head of hardware engineering, will succeed Cook as CEO on September 1, with Cook moving into the role of executive chairman.

Ternus joined the earnings call, with Cook expressing confidence in the transition, stating that Apple has “the right leader” and a team capable of delivering on the company’s long-term vision. Ternus, in turn, pointed to an “incredible roadmap ahead,” describing the current moment as the most exciting period of his 25-year career at Apple.

A key strategic priority for the incoming CEO will be artificial intelligence. Earlier in the quarter, Apple announced a partnership with Google to integrate its Gemini AI model into Siri. Cook noted that the collaboration is progressing well, while also emphasizing Apple’s parallel in-house AI development efforts.

Services continued to be a major growth driver, with revenue rising 16% year over year. Leveraging its installed base of more than 2.5 billion active devices, Apple is expanding high-margin offerings across subscriptions, payments, cloud storage, and support services.

That shift is steadily lifting profitability. Gross margin climbed to 49.3% in the quarter, up from 48.2% in the prior period—continuing a multi-year trend of margin expansion driven by services.

Geographically, Greater China stood out, with revenue jumping 28% to $20.5 billion, reinforcing its position as Apple’s third-largest market after the Americas and Europe.

Meanwhile, research and development spending surged 33% to $11.42 billion, significantly outpacing revenue growth. Tim Cook attributed the increase to deeper investment in future technologies, particularly AI.

“We’re clearly investing more,” he said, highlighting opportunities across both products and services. Kevan Parekh added that artificial intelligence represents a “critical investment area,” with spending set to rise incrementally alongside Apple’s core product roadmap.