Apple surprises Wall Street: iPhone drives results and shares rise

Apple closed its first fiscal quarter with results well above Wall Street expectations, posting revenue growth of 16% year over year. The market reacted positively, with shares rising more than 1% in after-hours trading. Earnings per share came in at $2.84, compared with analysts’ forecasts of $2.67, while revenue reached $143.76 billion, surpassing consensus estimates of $138.48 billion. Gross margin rose to 48.2%, also exceeding expectations. The results were driven primarily by iPhone, which generated $85.27 billion in revenue, up 23% year over year and well above forecasts. iPad sales also exceeded expectations, while Mac, Wearables and Services came in slightly below estimates.

Net income rose to $42.1 billion, compared with $36.33 billion in the same period last year. Chief Financial Officer Kevan Parekh said Apple expects revenue growth of between 13% and 16% year over year in the current quarter, implying revenue of up to $110.66 billion, well above market expectations. Apple also warned of iPhone supply constraints, while Services revenue is expected to maintain a growth rate of around 14%.

According to Chief Executive Officer Tim Cook, demand for the new iPhone 17 models launched in September was “simply staggering,” marking a reversal from the slight decline reported in the previous holiday quarter. Apple’s installed base of devices has reached 2.5 billion, strengthening the company’s long-term services growth potential. Performance in China, including Taiwan and Hong Kong, was particularly strong, with revenue surging 38% to $25.53 billion. Cook said Apple set an all-time record for upgrades and saw strong growth from customers switching from other brands.

On the artificial intelligence front, Apple announced a partnership with Google to integrate the Gemini model into Apple Intelligence. While Apple has invested less in AI than its competitors, the company continues to defend the strength of its platforms. Capital expenditures declined, while research and development spending rose significantly. Finally, Apple highlighted cost pressures linked to the global memory shortage and advanced chip manufacturing. During the quarter, the company returned nearly $32 billion to shareholders through dividends and share buybacks, underscoring the strength of its cash generation.

Andrea Pelucchi