iPhone and iPad maker Apple (NASDAQ: AAPL) reported revenue ahead of Wall Street’s expectations in Q2 CY2026, with sales up 16.4% year on year to $109.4 billion. Its non-GAAP profit of $2.02 per share was 7% above analysts’ consensus estimates.
Is now the time to buy AAPL? Find out in our full research report (it’s free for active Edge members).
Apple (AAPL) Q2 CY2026 Highlights:
- Revenue: $109.4 billion vs analyst estimates of $108.2 billion (1.1% beat)
- EPS (GAAP): $2.02 vs analyst estimates of $1.89 (7% beat)
- Gross Margin: 50.1%, up from 46.5% in the same quarter last year
- Operating Margin: 32.6%, up from 30% in the same quarter last year
- Market Capitalization: $4.90 trillion
StockStory’s Take
Apple’s second quarter results exceeded Wall Street’s expectations, but the market responded negatively as management highlighted intensifying supply constraints and rising component costs. CEO Tim Cook noted that robust demand for the latest iPhone and Mac lineups fueled growth, but constrained supply of advanced semiconductor nodes limited flexibility. Cook explained, “The constraints were primarily driven by the availability of the advanced nodes that our SoCs are produced on.” Management also pointed to higher memory costs as a key factor impacting margins and pricing decisions this quarter.
Looking forward, management expects ongoing supply chain limitations and rising memory costs to weigh on performance in the next quarter. CFO Kevan Parekh cited foreign exchange headwinds and further supply constraints on iPhone, Mac, and iPad as primary reasons for a projected growth deceleration, stating, “We expect the impact from supply constraints to increase significantly sequentially.” Cook also cautioned that escalating memory prices may require further pricing adjustments and could impact product affordability, while the rollout of Siri AI is expected to drive both user engagement and additional infrastructure investment.
Key Insights from Management’s Remarks
Management attributed the quarter’s outperformance to strong demand for new iPhone and Mac models, tariff refunds, and momentum in services, but warned that rising memory costs and supply bottlenecks will shape near-term trends.
-
iPhone and Mac demand surge: Both product lines experienced double-digit growth, driven by new model releases and increased consumer interest, especially in emerging markets. Management noted that the current iPhone lineup achieved record levels of upgraders and global market share gains.
-
Supply chain inflexibility: Cook explained that the supply of advanced semiconductor nodes is not meeting demand, and the company is experiencing less flexibility to respond to surges. This has led to heightened supply constraints for iPhone, Mac, and iPad, impacting the ability to fully capitalize on demand.
-
Rising memory costs: Management described memory pricing as a “100-year flood,” with exponential increases in memory component costs forcing Apple to raise prices on certain products. Cook noted that while some non-memory component costs are declining, memory inflation is a primary margin pressure and likely to persist.
-
Services business momentum: Services revenue, led by App Store, Apple TV+, and payment services, set records despite foreign exchange headwinds and some softness in mobile gaming. The installed base of devices and paid subscriptions reached all-time highs, underpinning long-term growth potential.
-
Tariff refunds boost margins: CFO Kevan Parekh disclosed that gross margin gains were partly attributable to tariff refunds, which contributed about two percentage points. Excluding this, gross margin would have been at the midpoint of prior guidance, indicating underlying cost pressures from memory inflation.
Drivers of Future Performance
Apple’s outlook for the rest of the year is defined by persistent supply constraints, continued memory cost inflation, and new product cycle risks.
-
Supply chain and FX headwinds: Management anticipates that foreign exchange rate movements and pronounced supply constraints, especially for advanced chips, will limit revenue growth in the coming quarter. These factors are projected to drive lower growth rates compared to the recent quarter.
-
Memory cost escalation: Rising DRAM and NAND memory prices are expected to further pressure gross margins and may necessitate additional price increases. Management is evaluating sourcing diversification, but expects benefits to be limited in the near term.
-
AI and services expansion: The launch of Siri AI and anticipated upgrades to iCloud+ could drive incremental demand and higher engagement, but will also require increased investment in on-device and cloud-based computation. The rollout of AI features may be subject to regional regulatory delays, particularly in Europe and China.
Catalysts in Upcoming Quarters
In the coming quarters, our team will watch (1) how Apple manages supply constraints and memory cost inflation, (2) the pace and breadth of Siri AI and Apple Intelligence adoption, and (3) the expansion and monetization of services—especially as new features roll out and regulatory hurdles are addressed. Developments in sourcing and chip supply flexibility will also be important indicators of future performance.
Apple currently trades at $312.33, down from $334.02 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).
Our Favorite Stocks Right Now
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.
Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.
