Apple Inc. reported strong fiscal second-quarter results on Thursday, surpassing Wall Street expectations on both revenue and profit, but the stock edged lower in after-hours trading as investors focused on a slight miss in iPhone sales and ongoing supply constraints for advanced chips.
The Cupertino-based technology giant posted revenue of $111.2 billion for the quarter ended March 28, 2026, a 17% increase year-over-year, while diluted earnings per share came in at $2.01, up 22% from the prior year. Analysts had forecast revenue of $109.66 billion and EPS of $1.95, according to LSEG data cited by Reuters.
Despite the earnings beat, shares slipped about 1% in extended trading, closing the regular session up $0.83 at $271.35. The muted reaction reflected investor concerns over iPhone sales, which totaled $56.99 billion, slightly below the $57.21 billion analysts had targeted. CEO Tim Cook described demand as "off the charts" in comments to Reuters, but acknowledged tight supply for the advanced chips powering the iPhone 17 series, citing "less flexibility" in the supply chain.
The results come at a pivotal time for Apple, just days after the company announced that Cook will transition to executive chairman, with hardware chief John Ternus set to take over as CEO on September 1. The leadership change adds pressure on Ternus to demonstrate he can sustain the iPhone juggernaut and provide a clearer roadmap for artificial intelligence, an area where Apple faces comparisons to rivals making bigger AI bets.
Apple's Mac division delivered a bright spot, generating $8.4 billion in revenue, topping the $8.02 billion estimate, driven partly by strong demand for the budget-friendly MacBook Neo tied to Ternus. Services revenue, which includes the App Store and subscriptions, reached $30.98 billion, also exceeding projections. In Greater China, sales climbed to $20.5 billion, ahead of analyst expectations.
The company reported a gross margin of 49.27%, surpassing the 48.38% analysts had anticipated, highlighting Apple's ability to wield pricing power and leverage bulk purchasing to offset cost pressures from pricier memory chips and processors. However, supply for those components remains constrained.
The board approved a $100 billion share buyback program and raised the quarterly dividend by 4% to $0.27 per share. While buybacks can boost earnings per share by reducing the share count, they do not address underlying product or growth challenges.
Apple's AI strategy remains under scrutiny. Unlike some competitors investing tens of billions in AI infrastructure quarterly, Apple's approach has been more measured, though research and development spending jumped 33.5% to $11.42 billion. Cook told Reuters the company was "all in" on AI and confirmed a more personalized Siri would launch later this year. Analysts noted that Apple's apparent move to tap Google's technology for Siri signals openness to external AI partnerships, with investors looking to Ternus to balance Apple's cautious approach with demands for a new consumer AI device.
Leadership questions persist. "The AI story remains one up in the air," said Jay Woods, chief market strategist at Freedom Capital Markets, noting that investors are watching how the executive shakeup might steer product innovation, capital deployment, and Apple's AI strategy in its next phase.
Despite the strong numbers, risks remain. If chip bottlenecks worsen, iPhone sales could face a near-term ceiling. The introduction of a cheaper MacBook might also dilute Apple's premium brand image if customers shift away from higher-priced models. Meanwhile, services revenue continues to face regulatory scrutiny in Europe and beyond. With a market capitalization near $4 trillion, Apple has little room for growth missteps.
