Management Guidance Summary
Short-Term (Q2 FY2026, Jan-Mar 2026)
- Revenue: $107.8-110.7B (+13-16% YoY), well above consensus of $104.8B
- Gross Margin: 48-49% (stable to slightly improving)
- Operating Expenses: $18.4-18.7B (elevated due to AI R&D)
- Tax Rate: ~17.5%
- Key commentary: iPhone supply remains constrained; "difficult to predict when supply and demand will balance" (Cook). Memory costs expected to pressure margins more in Q2.
Long-Term (Full Year / Multi-Year)
- Revenue trajectory: Double-digit growth driven by iPhone 17 cycle, Services momentum, and emerging market expansion
- Margin trajectory: Stable to expanding; Services mix shift supports gross margin; tariff headwinds partially offset
- Capex: Significant increases for AI/private cloud compute infrastructure; $500B US investment commitment over 4 years
- Strategic priorities: Apple Intelligence expansion, Google partnership for next-gen foundation models, enhanced Siri launching in 2026, private cloud compute buildout
- Installed base: 2.5 billion active devices, providing long-term Services monetization runway
Upside to Earnings & Multiples
Near-Term (0-6 months)
Q2 FY26 guidance of $107.8-110.7B significantly exceeds consensus ($104.8B), suggesting another beat is likely. iPhone supply constraints imply pent-up demand that could extend the cycle. Services at a $120B+ annual run-rate with 76.5% gross margins provides earnings stability. Memory cost headwinds appear manageable given strong pricing power. Near-term EPS upside of 5-10% vs consensus is plausible.
Medium-Term (6-18 months)
iPhone 17 cycle has further legs as supply constraints ease and pent-up demand converts. Apple Intelligence features launching throughout 2026 (enhanced Siri, Google partnership models) could drive a second wave of upgrades. Services revenue trajectory toward $130B+ annually with expanding margins. China recovery appears durable with 38% growth and record store traffic. Operating leverage from the $500B US investment program begins to materialize.
Long-Term (18+ months)
AI-driven ecosystem lock-in strengthens the installed base moat (2.5B devices). On-device AI and private cloud compute create differentiated capabilities competitors cannot easily replicate. India represents a massive underpenetrated market with majority of buyers new to Apple. Services TAM expansion through financial services, advertising, and health. Potential for new product categories leveraging the AI platform (AR/VR, automotive).
Potential Catalysts
- iPhone 17 super-cycle driving record upgraders and switchers globally
- China revenue surging +38% YoY with strong switcher momentum
- Apple Intelligence upgrade cycle extending multi-year iPhone demand
- Advanced node (3nm) supply constraints limiting iPhone production
- Tariff headwinds (~$1.4B/quarter impact on gross margin)
- Rising memory component costs pressuring near-term margins
Latest Quarter Results
Q1 FY2026 (Oct-Dec 2025) — Reported Jan 29, 2026
| Metric | Reported | YoY | vs Consensus | Next Q Guidance |
|---|---|---|---|---|
| Revenue | $143.8B | +16% | Beat | +13-16% YoY |
| EPS | $2.84 | +19% | Beat | — |
| Gross Margin | 48.2% | +130bps | — | 48-49% |
| Stock Reaction | +2% (after hours) | — | — | — |
Opportunities
- iPhone 17 super-cycle with record upgraders and switchers globally
- China revenue surging +38% YoY with strong switcher momentum
- Services hitting $30B/quarter with 76.5% gross margin
- Apple Intelligence driving new upgrade cycles and engagement
Challenges
- Advanced node (3nm) supply constraints limiting iPhone production
- Rising memory component costs pressuring near-term margins
- Mac revenue -7% YoY facing tough M4 launch comps
- Tariff headwinds (~$1.4B/quarter impact on gross margin)
Q4 FY2025 (Jul-Sep 2025) — Reported Oct 30, 2025
| Metric | Reported | YoY | vs Consensus | Next Q Guidance |
|---|---|---|---|---|
| Revenue | $102.5B | +8% | Beat ~1.3% | +10-12% YoY (Dec qtr) |
| EPS | $1.85 | +13% (adj) | Beat | — |
| Gross Margin | 47.2% | +100bps | — | 47-48% |
| Net Income | $27.5B | +16% (adj) | — | — |
| Stock Reaction | +3.5% (after hours) | — | — | — |
Opportunities
- Record fiscal year 2025 revenue of $416B and net income of $112B
- Services surpassed $100B annual revenue milestone (+15% YoY to $28.8B)
- iPhone 17 launched as "strongest lineup ever" with immediate supply constraints from demand
- Dec quarter guided for 10-12% growth ("best quarter ever")
Challenges
- Greater China revenue declined -3.6% YoY, a lingering weak spot
- Wearables/Home flat YoY at $9.0B despite strong Watch/AirPods offset by accessories
- Tariff costs estimated at $1.4B for the December quarter
- Mac faces very difficult comp against prior-year M4 launches in Dec quarter
Q3 FY2025 (Apr-Jun 2025) — Reported Jul 31, 2025
| Metric | Reported | YoY | vs Consensus | Next Q Guidance |
|---|---|---|---|---|
| Revenue | $94.0B | +10% | Beat 5.7% ($88.9B est) | Mid-to-high single-digit YoY |
| EPS | $1.57 | +12% | Beat 10.6% ($1.42 est) | — |
| Gross Margin | 46.5% | +20bps | — | 46-47% |
| Net Income | $23.4B | +9% | — | — |
| Stock Reaction | +2% (after hours) | — | — | — |
Opportunities
- iPhone revenue $44.6B (+13.5% YoY), record upgraders with strong emerging market growth
- Mac revenue $8.0B (+14.8% YoY) driven by M4 MacBook Air momentum
- Revenue records set in 25+ countries including India, Middle East, Latin America
- 1 billion+ paid subscriptions across Services platform
Challenges
- Tariff costs of ~$800M in Q3, with $1.1B estimated for Q4
- iPad revenue declined -8.1% YoY to $6.6B (tough iPad Pro/Air comp)
- Wearables/Home down -8.6% YoY due to product launch timing
- Guidance assumes macro outlook "does not worsen" and Google revenue share continues
Q2 FY2025 (Jan-Mar 2025) — Reported Apr 30, 2025
| Metric | Reported | YoY | vs Consensus | Next Q Guidance |
|---|---|---|---|---|
| Revenue | $95.4B | +5% | Beat ~0.8% (~$94.6B est) | Mid-to-high single-digit YoY |
| EPS | $1.65 | +8% | Beat ~2% (~$1.62 est) | — |
| Gross Margin | 47.1% | +180bps | — | — |
| Net Income | $24.8B | +5% | — | — |
| Stock Reaction | -2% (after hours) | — | — | — |
Opportunities
- iPhone revenue $46.8B (+2% YoY) with strong upgrade momentum
- Services reached all-time record of $26.6B (+12% YoY)
- Mac revenue $7.9B (+7% YoY) driven by M4 lineup
- India revenue set all-time record with majority of buyers new to Apple
Challenges
- iPad revenue flat at $6.4B amid product cycle gap
- Wearables/Home declined -5% to $7.5B
- Tariff uncertainty; management guided $900M impact for Jun quarter
- Greater China revenue -2% YoY on competitive pressures