Apple reported fiscal second quarter results Today that topped analyst expectations on nearly every major metric, fueled by a strong performance from its services division and a larger than anticipated showing from Greater China. Revenue reached $111.18 billion, up 17% from $95.4 billion in the same period a year earlier, and earnings per share came in at $2.01 against an estimated $1.95.
The results arrived at an unusual moment for the company. This was Apple’s first earnings report since announcing that Tim Cook will step down as chief executive on Sept. 1 after 15 years in the role, to be succeeded by John Ternus, the company’s senior vice president of hardware engineering.
By the numbers
Apple’s performance against analyst expectations broke down as follows across its major business segments. Services revenue reached $30.98 billion, ahead of the $30.39 billion Wall Street had projected and up roughly 16% from $26.65 billion a year ago. Mac revenue came in at $8.4 billion, topping estimates of $8.02 billion. iPad revenue of $6.91 billion beat the $6.66 billion consensus figure. Wearables, Home and Accessories generated $7.9 billion against an expected $7.7 billion. Gross margin expanded to 49.3%, well above the 48.4% that analysts had anticipated.
iPhone revenue, at $56.99 billion, was the one figure that came in slightly below the $57.21 billion estimate. Cook attributed the company’s overall strength to what he called extraordinary demand for the iPhone 17 lineup. Sales in the segment rose 22% from a year earlier, marking the second consecutive quarter of growth above 20%.
Apple services as a growth driver
Services has quietly become the part of Apple’s business that Wall Street watches most closely, and for good reason. The division, which includes Apple Pay, iCloud, AppleCare, and subscription entertainment offerings, benefits directly from Apple’s enormous installed base of iPhone users. Revenue in the segment has now climbed steadily for years, and the gross margin expansion it drives has been a defining feature of Apple’s financial story over the past several years. The company’s overall gross margin has risen from the high 30s to 49.3% this quarter, a shift that reflects how much more profitable the business has become.
Research and development costs grew 33% to $11.42 billion, rising considerably faster than revenue. That acceleration reflects Apple’s deepening investment in artificial intelligence. Early in the quarter, the company announced a partnership with Google to integrate the Gemini AI model into Siri, a significant signal about where Apple sees its near term AI strategy heading.
China surprises and supply chain pressure
Greater China revenue climbed to $20.5 billion, up 28% from $16 billion a year earlier and well above the $18.9 billion analysts had forecast. China remains Apple’s third largest market behind the Americas and Europe, and the stronger showing there gave the overall results a meaningful lift.
The global memory shortage, driven by surging demand for AI data center infrastructure, continues to affect the broader device industry. Meta and Microsoft both flagged higher memory costs as a factor in their increased capital expenditure projections earlier this week. Apple has also warned that elevated memory prices could pressure margins, even as premium smartphones like the iPhone are considered largely insulated from the broader smartphone market contraction. Global smartphone shipments fell 4.1% in the first quarter to 289.7 million units, according to the International Data Corporation, breaking a 10-quarter streak of growth.
Apple also announced in March a $599 MacBook Neo aimed at students and budget-focused buyers. The Mac mini has drawn attention separately as a hardware platform for developers building AI agent applications, a trend that has helped sustain interest in the product line.
A leadership transition with a roadmap attached
Apple’s board authorized an additional $100 billion in stock repurchases and declared a quarterly cash dividend of 27 cents per share, a 4% increase. The capital return announcement came alongside the transition news that has dominated investor conversations since late April.
Ternus joined the earnings call after Cook’s opening remarks. He acknowledged shareholders and described an incredible roadmap ahead, though he offered little specific detail about the company’s AI direction or product plans under his leadership. That question, how Apple positions itself in the AI era under a new chief executive, is the one investors and analysts are likely to stay focused on as the September handoff approaches.
Cook, who joined Apple in 1998 and became CEO following Steve Jobs’s death in 2011, will move into an executive chairman role. Apple’s stock moved roughly 1% higher following the report.