"Exceptional demand" for the iPhone 17 boosted Apple's revenue by 17%. Shares jumped

Apple beat analysts' expectations for earnings and revenue thanks to growth in service revenue and demand for the iPhone 17, which CEO Tim Cook called the best smartphone ever made. In addition to the figures from the report, investors were interested in Apple's development strategy under a new CEO: John Ternus will succeed Cook in September. So far, he declares the continuity of the course and promises updates in the product line. Apple shares were initially down 1% in extended trading on Thursday, following the publication of the report, but then moved up more than 3%.

Apple's total revenue in the second quarter of fiscal year 2026, ended March 28, rose 17% to $111.12 billion. Analysts surveyed by LSEG expected $109.66 billion, CNBC reported. The Greater China region, which includes China, saw the biggest sales growth, up 28% to $20.5 billion. Earnings per share in the quarter rose 22% to $2.01 versus a forecast of $1.95.

iPhone sales fell short of the expectations of analysts surveyed by LSEG: they totaled $56.99 billion versus $57.21 billion forecast, CNBC reports. Still, smartphone revenue was up 21.7% year-over-year. At a conference call on the quarterly results, Apple CEO Tim Cook said that "exceptional demand" for the iPhone 17 family provided the company with the highest financial results in Apple's history for this period of the year, writes the Financial Times.

Revenue from services (advertising, AppleCare, App Store, Apple Music, Apple TV, iCloud, Apple Pay, etc.) grew 16.3% year-over-year to $30.98 billion versus expectations of $30.39 billion.

Gross margin in the second quarter was at 49.3% versus 48.4% in the forecasts. This figure does not yet show the negative impact of rising memory chip prices, which has put pressure on other hardware makers and cloud providers, said Bernstein analyst Anurang Rana, whose opinion is quoted by Bloomberg. This suggests that the company's management is dealing with this problem better than most competitors, he notes.

"The strong recovery in China and rising iPhone sales indicate that Apple can build market share as other smartphone makers raise prices due to rising memory costs," Rana said.

Apple gave an unexpectedly strong revenue forecast for the current quarter, showing it is managing to cope with a supply shortage that has rocked the technology industry, Bloomberg writes. Sales should grow 14 to 17 percent, the company said during a conference call Thursday. Analysts' average forecast called for growth of only 9.1%, the agency notes.

Apple said that its board of directors approved an additional $100 billion share repurchase program and declared a cash dividend of $0.27 per share, up 4% from the previous level.

Apple shares initially fell 1% in extended trading on April 30 before jumping 4% to $281.5 after reporting its revenue forecast. Thursday's main trading ended up 0.4% to $271.4.

The big question for Wall Street right now is what to expect from incoming CEO John Ternus. On April 20, Apple announced that Ternus will succeed Cook on Sept. 1. "We have the right executive ready to step into this role," Cook said in his opening remarks at the conference call, adding that Apple has a team capable of realizing the "potential of this company."

"We have an incredible roadmap in front of us. And while you can't get me to reveal its details, suffice it to say that in my entire 25-year career at Apple, this is the most exciting time to build products and services," Ternus said during the call. "There are so many opportunities in front of us, and I'm more optimistic than ever about what lies ahead"(quoted in Yahoo Finance).

One of the first questions Ternus will have to deal with is where Apple will move in the field of artificial intelligence: to catch up with competitors or drop out of the race, journalist Roman Mighty wrote in a column for Oninvest.

This article was AI-translated and verified by a human editor