Earnings Call Insights: Apple Inc. (AAPL) Q1 2026
Management View
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CEO Timothy Cook stated, “We are reporting our best-ever quarter with $143.8 billion in revenue, up 16% from a year ago and exceeding our expectations.” Cook highlighted that iPhone demand was “simply staggering” with revenue growing 23% year-over-year and all-time records across every geographic segment. He added, “Services set an all-time revenue record as well, up 14% from a year ago, and EPS reached an all-time record of $2.84, growing a robust 19% year-over-year.”
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Cook emphasized momentum in emerging markets, noting, “Greater China also grew 38% year-over-year, driven by iPhone, which had record upgraders and double-digit growth on switchers.” He also noted strong performance in India with “strong double-digit revenue growth.”
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Cook underscored innovation in AI, stating, “During the quarter, we were excited to see that the majority of users on enabled iPhones are actively leveraging the power of Apple Intelligence.” He announced a collaboration with Google “to develop the next generation of Apple foundation models. This will help power future Apple Intelligence features, including a more personalized series coming this year.”
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CFO Kevan Parekh reported, “Our revenue of $143.8 billion was up 16% year-over-year, our best quarter ever. Across the world, we set all-time revenue records in both developed and emerging markets.” Parekh added, “Products revenue was $113.7 billion, up 16% year-over-year, driven by double-digit growth in iPhone, setting a new all-time record.”
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Parekh highlighted, “Company gross margin was at 48.2%, above the high end of our guidance range and up 100 basis points sequentially, driven by favorable mix and leverage.”
Outlook
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Parekh provided guidance for the March quarter, stating, “We expect our March quarter total company revenue to grow by 13% to 16% year-over-year, which comprehends our best estimates of constrained iPhone supply during the quarter.”
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Parekh added, “We expect services revenue to grow at a year-over-year rate similar to what we reported in the December quarter. We expect gross margin to be between 48% and 49%. We expect operating expenses to be between $18.4 billion and $18.7 billion.”
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Management indicated that guidance factors in continued constraints, particularly in iPhone supply due to advanced node availability for SoCs and anticipated memory price inflation.
Financial Results
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Apple reported $143.8 billion in revenue, a 16% year-over-year increase. iPhone revenue reached $85.3 billion, up 23% year-over-year, driven by the iPhone 17 family.
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Services revenue was $30 billion, up 14% year-over-year, with all-time records in advertising, cloud services, music, and payment services.
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EPS was $2.84, up 19% year-over-year, and net income reached $42.1 billion. Operating cash flow hit $53.9 billion, an all-time record.
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Gross margin was 48.2%. Product gross margin was 40.7%, up 450 basis points sequentially. Services gross margin was 76.5%, up 120 basis points sequentially.
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Mac revenue was $8.4 billion, down 7% year-over-year; iPad revenue was $8.6 billion, up 6%; Wearables, Home and Accessories revenue was $11.5 billion, down 2% year-over-year due to AirPods Pro 3 supply constraints.
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Apple ended the quarter with $145 billion in cash and marketable securities, $91 billion in total debt, and net cash of $54 billion. $32 billion was returned to shareholders.
Q&A
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Amit Daryanani, Evercore: Asked about memory supply and margin impacts. Cook explained, “We are currently constrained. The constraints that we have are driven by the availability of the advanced nodes that our SoCs are produced on.” Cook noted, “Memory had a minimal impact on the Q1… We do expect it to be a bit more of an impact to the Q2 gross margin.”
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Erik Woodring, Morgan Stanley: Inquired about AI monetization and iPhone cycle sustainability. Cook responded, “We’re bringing intelligence to more of what people love, and we’re integrating it across the operating system in personal and private way… it creates great value and that opens up a range of opportunities across our products and services.”
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Michael Ng, Goldman Sachs: Asked about sales comps and advertising growth in services. Parekh answered, “I wouldn’t say there’s any particular comp issue that we’d note… it’s just a continuation of the strong cycle.”
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Benjamin Reitzes, Melius: Questioned the Google AI partnership and gross margin resilience. Cook stated, “We believe that we can unlock a lot of experiences and innovate in a key way due to the collaboration.” Parekh attributed gross margin strength to “favorable mix dynamics” and services contribution.
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Wamsi Mohan, BofA: Pressed on App Store growth and memory pricing. Parekh reiterated record App Store performance but declined to break out details. Cook would not speculate on pricing as a lever for memory cost pressures.
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Additional analysts focused on India growth, silicon integration, and supply constraints. Cook and Parekh highlighted continued strong new customer adoption and strategic investments in Apple Silicon.
Sentiment Analysis
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Analysts were persistent on supply constraints, memory pricing, and monetization of AI, displaying a slightly skeptical to neutral tone, particularly around sustainability of margins and the impact of cost pressures.
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Management maintained a confident tone in prepared remarks: “I have every confidence that our best work is yet to come” (Cook). During Q&A, responses were measured and, at times, cautious, especially when discussing supply and pricing levers: “I wouldn’t want to speculate on that one” (Cook).
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Compared to the previous quarter, management exuded greater confidence, especially regarding record results and future AI initiatives, while analysts remained focused on risks and sustainability.
Quarter-over-Quarter Comparison
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Guidance for revenue growth increased to 13%-16% for the March quarter, up from the prior 10%-12% December quarter outlook. Gross margin guidance also rose to 48%-49% from 47%-48% previously.
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iPhone revenue growth accelerated from 6% in Q4 2025 to 23% in Q1 2026. Services revenue growth remained strong but moderated slightly from 15% to 14%.
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Mac revenue declined year-over-year in Q1 after growth in Q4 due to tough prior-year comparisons. Wearables revenue fell 2% after being flat the previous quarter, attributed to AirPods supply constraints.
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Management’s tone was more upbeat, driven by all-time records. Analysts maintained a similar focus on supply, cost inflation, and AI strategy across both quarters.
Risks and Concerns
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Management cited ongoing iPhone supply constraints due to advanced node availability, with Cook stating, “it’s difficult to predict when supply and demand will balance.”
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Memory price inflation was flagged as a risk to gross margins, with Parekh noting that it was “comprehended in the outlook of 48% to 49%.”
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Wearables revenue was impacted by AirPods Pro 3 supply constraints, and management acknowledged less flexibility in the supply chain than normal.
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Analysts questioned the sustainability of service growth and the ability to offset component cost pressures.
Final Takeaway
Apple management emphasized the company’s record-setting quarter, driven by robust iPhone demand and continued growth in services, while acknowledging supply constraints on advanced nodes and rising memory costs. The company projects double-digit revenue growth for the March quarter and maintains a strong outlook for gross margins, with strategic investments in AI and silicon innovation expected to drive future opportunities. Management remains confident in Apple’s trajectory, despite operational headwinds and persistent analyst focus on supply and cost risks.