$111 billion in record profits for Apple, warnings of supply constraints and rising costs
Apple, the global tech giant, has announced exceptional financial results for the second quarter of fiscal year 2026, exceeding all analysts' expectations, in conjunction with the approaching date of the handover of leadership from Tim Cook to his successor John Ternos.
The company's financial statements, released on Thursday, revealed that total revenues for the three months ended in March amounted to $111.2 billion, recording an increase of 17% compared to the same period of the previous year.
This figure came higher than Wall Street's forecast of revenue in the range of $109.7 billion, while net profit jumped to $29.58 billion, and earnings per share reached $2.01, ahead of market estimates of $1.94.
iPhone 17 Leads Global Sales Boom
The iPhone 17 formed the backbone of this record performance, with sales of $56.99 billion, a 22% jump compared to last year.
Tim Cook, the company's current CEO, confirmed that the demand for the new phone, which he described as "extraordinary", has increased significantly, noting that sales have grown at remarkable rates, especially in China, which has seen a jump of 28%.
"Apple is proud today to announce the best March quarter of its career, with record revenue and double-digit growth in every geographic segment it operates," Cook said in a statement commenting on the results.
Services Sector Records Record Numbers
Hardware sales were not the only contributors to this success, but the services segment generated record revenues of $30.98 billion, including the App Store, cloud storage services, Apple Music, Apple TV Plus, and warranty services.
As for the rest of the product lines, Macs recorded revenues of $8.40 billion, while "iPads" achieved $6.91 billion, and "Wearables and Accessories" revenues reached $7.90 billion.
Warnings of supply constraints and rising costs
Despite these impressive numbers, Cook issued a warning about the supply chain constraints the company is facing, especially with regard to the limited production capacity of advanced semiconductor chips supplied by Taiwanese company TSMC, expecting these constraints to worsen during the current quarter.
He also warned of a sharp rise in memory costs in the coming months, saying that this increase "will not disappear anytime soon", which could put pressure on profitability margins.
R&D spending rose 33.6% to $11.42 billion as the company strives to catch up with the generative AI revolution in which it lags behind rivals such as Google, Microsoft, and OpenAI.
Apple expects revenue growth for the next quarter to be between 14% and 17%, equivalent to about $107 billion to $110 billion, which is well above analysts' estimates of 9.5%.
Leadership transition. Ternus receives the pennant from Cook
These record results come at a pivotal moment in the company's history, as Apple announced on April 20 that Tim Cook would step down as CEO effective September 1 to take over as CEO.
He will be succeeded in the top executive position by John Ternos, an engineer who spent a quarter of a century within the company's walls and is currently senior vice president of hardware engineering.
Ternos joined Apple's product design team in 2001 and became vice president of hardware engineering in 2013, before joining the executive team in 2021. He has played a pivotal role in the development of several major product lines, including iPads and AirPods, as well as multiple generations of iPhones, Macs, and Apple Watches.
Arthur Levinson, who has served as Apple's non-executive chairman for 15 years, is set to assume the role of chief independent director from September 1, completing the new leadership structure at one of the world's largest companies.