Apple smashes earnings expectations with a record $143.8 billion in quarterly revenue (up 16% YoY) and $2.84 EPS (up 19% YoY), driven by unprecedented iPhone demand and Services growth. Stock rose 0.72%-1.9% in after-hours trading, with analyst sentiment highly bullish on the results.
About Apple Inc
Apple Inc. is a multinational technology company headquartered in Cupertino, California, founded in 1976. The company is the world’s most valuable technology hardware company by market capitalization, with a current market cap of approximately $3.87 trillion as of January 2026. Apple designs, manufactures, and sells consumer electronics including iPhones, iPads, Mac computers, and wearables, while also operating a highly profitable Services ecosystem that includes the App Store, Apple Music, iCloud, and payment services. With 79.73 billion shares outstanding and a stock price of $259.70, Apple commands the largest installed base of active devices globally at 2.5 billion units, reflecting unmatched customer loyalty and ecosystem strength. The company employs approximately 161,000 people worldwide and maintains the industry’s most disciplined capital allocation model, returning billions to shareholders annually through dividends and share repurchases.
Top Financial Highlights
- Total Revenue: $143.8 billion, up 16% year-over-year, representing an all-time record.
- Diluted Earnings Per Share: $2.84, up 19% year-over-year, setting a new all-time EPS record.
- Net Income: $42.1 billion, up 15.9% year-over-year, another all-time record.
- Gross Margin: 48.2%, up 130 basis points from prior year, exceeding guidance range.
- Operating Cash Flow: $53.9 billion, an all-time record and up significantly from prior year.
- iPhone Revenue: $85.3 billion, up 23% year-over-year with record performance across all geographic segments.
- Services Revenue: $30 billion, up 14% year-over-year, reaching an all-time record.
- Products Revenue: $113.7 billion, up 16% year-over-year.
- Operating Expenses: $18.4 billion, up 19% year-over-year but within guided range.
- Products Gross Margin: 40.7%, up 450 basis points sequentially.
- Services Gross Margin: 76.5%, up 120 basis points sequentially.
- Operating Margin: ~35.4%, reflecting healthy profitability expansion.
- Capital Returned to Shareholders: $32 billion, including $3.9 billion in dividends and $25 billion in share repurchases.
- Installed Base: 2.5+ billion active devices, an all-time high across all product categories.
- Geographic Records: All-time revenue records in the Americas, Europe, Japan, and the rest of the Asia Pacific.
Beat or Miss?
| Metric | Reported | Consensus Estimate | Difference | Result |
| Earnings Per Share | $2.84 | $2.65-$2.67 | +$0.17-$0.19 (+6.3-7.0%) | Beat by 6-7% |
| Total Revenue | $143.8 billion | $137.47-$141.3 billion | +$2.5-6.3 billion (+1.8-4.6%) | Beat by 4-4.6% |
| Gross Margin | 48.20% | ~47.5-48% (guidance) | +20-70 bps | Beat (above guidance) |
| Operating Cash Flow | $53.9 billion | N/A | N/A | All-time record |
| iPhone Revenue | $85.3 billion | ~$78.3 billion | +$7 billion (+8.9%) | Major outperformance |
| Services Revenue | $30 billion | >$30 billion (expected) | In-line | Met expectations |
Key Insight: Apple delivered a blowout quarter with significant beats on both EPS and revenue. The EPS surprise of 6-7% and revenue surprise of 4.6% demonstrate the company’s ability to exceed high expectations, driven primarily by iPhone demand that substantially outperformed analyst forecasts.
What Leadership Is Saying
“Today, Apple is proud to report a remarkable, record-breaking quarter, with revenue of $143.8 billion, up 16 percent from a year ago and well above our expectations. iPhone had its best-ever quarter driven by unprecedented demand, with all-time records across every geographic segment, and Services also achieved an all-time revenue record, up 14 percent from a year ago. We are also excited to announce that our installed base now has more than 2.5 billion active devices, which is a testament to incredible customer satisfaction for the very best products and services in the world.” — Tim Cook, CEO
“During the December quarter, our record business performance and strong margins led to EPS growth of 19 percent, setting a new all-time EPS record. These exceptionally strong results generated nearly $54 billion in operating cash flow, allowing us to return almost $32 billion to shareholders.” — Kevan Parekh, CFO
Historical Performance Comparison
| Category | Q1 FY2026 (Dec 2025) | Q1 FY2025 (Dec 2024) | Change | YoY Growth % |
| Total Revenue | $143.8B | $124.3B | +$19.5B | 15.70% |
| iPhone Revenue | $85.3B | $69.1B(est.) | +$16.2B | 23.30% |
| Services Revenue | $30B | $26.4B(est.) | +$3.6B | 13.46 |
| Net Income | $42.1B | $36.3B(est.) | +$5.8B | 15.90% |
| Diluted EPS | $2.84 | $2.40 | $0.44 | 18.11 |
| Gross Margin | 48.20% | 46.90% | +130 bps | +1.3 pp |
| Operating Cash Flow | $53.9B | N/A | N/A | All-time record |
Analysis: Apple delivered exceptional year-over-year growth across all major metrics, with iPhone revenue acceleration being the standout story (23.3% growth). EPS growth of 19% significantly outpaced revenue growth of 16%, indicating margin expansion and disciplined share repurchases. The 130-basis-point margin improvement reflects favorable product mix, pricing discipline, and operational leverage.
How the Market Reacted
Following the announcement of record-breaking earnings after the close on January 29, 2026, Apple’s stock experienced a positive reception in after-hours trading, rising between 0.72% to 1.9% depending on the measurement point, with shares reaching approximately $258-$259 levels. The modest gains, while positive, reflect investor sentiment that the exceptional results were largely priced into the stock ahead of the earnings announcement. Market participants appeared focused on forward guidance and margin sustainability rather than the historical earnings beat alone. Analyst consensus remains strongly bullish, with a consensus price target of approximately $285.59 as of late January, implying roughly 16% upside potential from post-earnings prices. The muted stock reaction—despite a 6-7% EPS beat and 4.6% revenue beat—suggests sophisticated investors view Apple’s elevated valuation as justified by fundamentals but limiting near-term upside potential. However, the company’s guidance for March quarter revenue growth of 13-16% year-over-year, maintaining services momentum, and gross margins of 48-49%, continues to support the bullish long-term thesis.
Additional Context: Q2 FY2026 Guidance
Apple provided the following outlook for the March quarter 2026:
- Total Company Revenue: Expected to grow 13-16% year-over-year, which includes Apple’s estimates for constrained iPhone supply.
- Services Revenue: Expected to grow at a year-over-year rate similar to Q1 FY2026 levels (approximately 13-14%).
- Gross Margin: Expected to range between 48-49%, maintaining current profitability levels.
Key Assumption: Forward guidance assumes global tariff rates, policies, and their application remain in effect as of the earnings call date and the global macroeconomic outlook does not worsen.
Investment Thesis Summary
Apple’s Q1 FY2026 results represent a resounding validation of the company’s strategic positioning in a premium consumer electronics and services market. The combination of unprecedented iPhone demand (23% revenue growth), record Services performance (+14%), and margin expansion (48.2% gross margin) demonstrates Apple’s pricing power, product-market fit, and operational excellence. With over 2.5 billion active devices globally and a 76.5% gross margin in Services, Apple has successfully engineered a durable, highly profitable business model that generates exceptional cash flows ($53.9 billion OCF in a single quarter).
The stock’s modest reaction to a significant earnings beat suggests that much of the outperformance is already reflected in the current valuation at ~32x forward earnings. Investors should monitor forward guidance execution, particularly regarding iPhone supply constraints in Q2 and the sustainability of Services growth in a potentially slowing macroeconomic environment. However, Apple’s demonstrated pricing discipline, geographic diversification (with strong growth in China at 38% YoY), and diversified revenue streams position the company well for continued shareholder value creation.
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