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Apple delivered one of its strongest quarterly performances in recent years, comfortably beating Wall Street expectations across revenue, earnings and guidance, as surging iPhone 17 demand and accelerating Services growth reinforced investor confidence in the company’s long-term growth trajectory.
The fiscal Q2 2026 results also marked an important moment for Apple, as the company faced investors for the first time following the announcement that CEO Tim Cook will step down later this year after 15 years leading the company.
Despite ongoing supply chain pressures and rising memory costs linked to the global AI boom, Apple demonstrated remarkable resilience, supported by strong ecosystem monetisation, expanding margins and renewed momentum in China.
Apple reported revenue of $111.2 billion for the March quarter, representing 17% year-on-year growth and comfortably surpassing analyst expectations of $109.7 billion. Earnings per share came in at $2.01, above consensus estimates of $1.95 and up 22% from the prior year period. 1
The company also issued stronger-than-expected guidance for the current quarter, forecasting revenue growth between 14% and 17%, significantly ahead of Wall Street expectations for roughly 9%-10% growth. 1
The results underline that Apple’s growth engine remains firmly intact despite concerns around slowing consumer spending, AI competition and supply chain constraints.
The biggest contributor to Apple’s strong quarter was continued demand for the iPhone 17 lineup, which Tim Cook described as “the most popular lineup in our history.”
iPhone revenue rose more than 20% year-on-year to nearly $57 billion, marking a record March quarter for the segment. The performance came despite component shortages and broader supply constraints affecting both iPhones and Macs. 1
The strong upgrade cycle suggests consumers continue to prioritise premium Apple devices even in a higher interest rate environment, reinforcing the company’s pricing power and brand loyalty.
Importantly, Apple also saw significant strength in Greater China, where revenue surged 28% year-on-year to $20.5 billion, reversing concerns that competition from domestic smartphone makers was materially impacting demand. 1|
China remains Apple’s third-largest market after the Americas and Europe, making the rebound particularly important for long-term growth expectations.
Apple’s Services division once again emerged as one of the company’s most important growth drivers.
Services revenue climbed 16% year-on-year to a record $30.98 billion, beating Wall Street forecasts and helping lift gross margins to 49.3%, above analyst expectations. 2
The segment includes Apple Music, Apple TV+, Apple Pay, iCloud, AppleCare, App Store revenue and advertising services.
With more than 2.5 billion active Apple devices globally, the company continues to monetise its ecosystem at a very efficient rate.
The expansion of higher-margin recurring revenue streams is becoming important for investors, particularly as hardware growth naturally matures over time.
Artificial Intelligence remains a central focus for Apple heading into the second half of 2026.
Research and development spending jumped 33% year-on-year to $11.4 billion as the company increases investment in AI infrastructure, products and services. 1
Management also confirmed that Apple’s collaboration with Google around Gemini AI integration into Siri is progressing well, while Apple continues to develop its own internal AI capabilities.
The upcoming Worldwide Developers Conference (WWDC) in June is now viewed as a major catalyst for Apple’s AI strategy, particularly regarding future Siri upgrades and the broader rollout of Apple Intelligence.
Investors will be watching whether Apple can successfully monetise AI in the same way it transformed smartphones, services and wearables over the past decade.
Another major theme surrounding the quarter was Apple’s upcoming leadership transition.
Tim Cook will become Executive Chairman on the 1st of September, while longtime hardware executive John Ternus will assume the CEO role.
Management sought to reassure investors that the transition represents continuity rather than disruption. Ternus emphasised that Apple has an “incredible roadmap ahead,” while Cook highlighted confidence in the company’s long-term strategy and leadership depth.
The market reaction suggests investors currently view the transition as stable and well-managed, although execution under new leadership will remain closely monitored.
Despite the strong quarter, Apple also warned that rising memory prices linked to booming AI demand could become a growing pressure point.
The global memory shortage has pushed DRAM and NAND prices significantly higher as hyperscalers and AI infrastructure providers continue expanding data centre capacity. 2
Apple stated that memory costs are expected to rise materially in coming quarters, potentially weighing on margins if supply constraints persist.
However, the company’s ability to maintain nearly 50% gross margins despite these pressures demonstrates the strength of its ecosystem and premium pricing model.
Source: TradingView. Apple daily price chart as of 12 May 2026.
Following the earnings release, Apple shares moved higher as investors reacted positively to stronger guidance, accelerating Services growth and continued iPhone momentum.
While valuation multiples have expanded following the rally, investors appear willing to pay a premium for companies demonstrating AI monetisation potential, resilient consumer demand, strong recurring revenue streams, pricing power and ecosystem dominance.
The next major catalyst for Apple shares will likely be WWDC in June, where management is expected to provide further clarity around its AI roadmap and future Siri developments.
From a technical perspective, the share price has surged almost 20% from its March lows, breaking above its previous key resistance. The breakout has bullish implications and points to higher price levels over the medium-term. The potential upside price target based on the breakout is $320.
In the short-term, the price may experience a pull back as momentum indicators have reached overbought territory. We see such potential short-term share price weakness as a buying opportunity.
Professional investors looking for magnified exposure to Apple may consider Leverage Shares +3x Long Apple or -3x Short Apple ETPs.
Footnotes:
Websim is the retail division of Intermonte, the primary intermediary of the Italian stock exchange for institutional investors. Leverage Shares often features in its speculative analysis based on macros/fundamentals. However, the information is published in Italian. To provide better information for our non-Italian investors, we bring to you a quick translation of the analysis they present to Italian retail investors. To ensure rapid delivery, text in the charts will not be translated. The views expressed here are of Websim. Leverage Shares in no way endorses these views. If you are unsure about the suitability of an investment, please seek financial advice. View the original at
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