Apple (AAPL) beats expectations, issues strong forecast despite iPhone sales miss
Apple Inc. delivered stronger-than-expected results for its fiscal second quarter and issued an optimistic revenue forecast for the current period, pushing its stock up about 3% in after-hours trading. The company exceeded analysts’ expectations for both earnings and overall revenue, although iPhone sales fell slightly short of projections.
Earnings per share came in at $2.01, surpassing the expected $1.95, while total revenue reached $111.18 billion, ahead of the anticipated $109.66 billion. Despite this solid performance, iPhone revenue totaled $56.99 billion, just below the expected $57.21 billion, marking the second time in three quarters that this key segment underperformed expectations.
Other product categories showed stronger results. Mac revenue reached $8.4 billion, exceeding forecasts of $8.02 billion, while iPad revenue came in at $6.91 billion, also above estimates. The Wearables, Home, and Accessories segment generated $7.9 billion, slightly beating expectations, and Services revenue rose to $30.98 billion, outperforming projections of $30.39 billion. The company’s gross margin improved to 49.3%, higher than the expected 48.4%.
Overall, revenue increased by 17% compared to $95.4 billion in the same period last year. This earnings report is particularly significant as it follows the recent announcement that CEO Tim Cook will step down after 15 years, with John Ternus set to take over as the new chief executive.
Looking ahead, Apple expects revenue in the June quarter to grow between 14% and 17% year over year, significantly above analysts’ expectations of 9.5% growth. The company also announced an additional $100 billion share buyback program and increased its dividend by 4% to 27 cents per share.
iPhone sales grew by 22% compared to the previous year, but Apple continues to face supply chain challenges, mainly due to a global memory shortage driven by rising demand for artificial intelligence technologies. Companies like Meta Platforms and Microsoft have also reported increased costs linked to higher memory prices.
Cook noted that the iPhone 17 is the most popular lineup in Apple’s history and emphasized that overall revenue exceeded expectations despite supply constraints. However, he warned that memory costs are expected to rise further, which could increasingly affect the company’s business in future quarters.
In addition to financial performance, Apple introduced several new products in March, including the iPhone 17e, updated iPad Air models with the M4 chip, and the MacBook Neo, a budget-friendly laptop aimed at students.
Ternus, who has been leading Apple’s hardware division, expressed confidence in the company’s future, describing the current period as the most exciting time in his 25-year career. One of his key challenges will be advancing Apple’s strategy in artificial intelligence. Earlier in the quarter, Apple announced a partnership with Google to integrate its Gemini AI model into Siri.
Services continued to be a major growth driver, with revenue increasing by about 16% year over year. Apple benefits from its large installed base of over 2.5 billion active devices, allowing it to expand subscription-based offerings such as entertainment, cloud storage, and payment services. This segment also contributes to higher profit margins, which have steadily increased in recent years.
Regionally, sales in Greater China rose 28% to $20.5 billion, making it Apple’s third-largest market after the Americas and Europe. Meanwhile, research and development spending grew by 33% to $11.42 billion, reflecting Apple’s increased investment in innovation, particularly in artificial intelligence.
According to Cook, the company is significantly increasing its investments in both products and services, with AI representing a key area of future growth.
