Apple’s Q2 2026 report card: $111 billion in revenue, a record on every line, and a memory bill coming due |
Apple closed its fiscal second quarter with $111.2 billion in revenue, a new March quarter record, and double-digit growth across every product category and every region. The iPhone 17 family drove the headline, pulling in $57 billion—a March quarter record—even with supply constraints pinching availability. CEO Tim Cook said demand was “off the charts,” held back by limited availability of the advanced semiconductor nodes Apple’s chips are built on. Services hit yet another all-time high at $31 billion, with records across most categories in both developed and emerging markets. Gross margin came in at 49.3%, up from 47.1% in the year-ago quarter. That number will be harder to hold onto as memory costs rise.
The iPhone 17 cycle is the strongest Apple has ever had
Apple doesn’t hand out superlatives lightly, but CFO Kevan Parekh was unusually direct on the call: the iPhone 17 family is now the most popular lineup in the company’s history, measured from launch through the March quarter. According to IDC data cited by Apple, the company gained market share during the quarter. Customer satisfaction, measured by 451 Research, came in at 99% in the US, a number Cook called “unheard of.“The $57 billion in iPhone revenue came despite the A19 and A19 Pro chips proving to be a bottleneck. TSMC produces those chips on the same advanced 3nm nodes it uses for AI accelerators, which are in higher demand than Apple can easily compete with for allocation. Cook said the constraints were “primarily driven by the availability of the advanced nodes our SoCs are produced on,” not by consumer demand softening. iPhone 17e, the $599 entry model launched during the quarter, also drew strong interest as a budget option in markets like India and Latin America where first-time iPhone buyers are the growth story.Looking at geography, iPhone was the top-selling model in the US, urban China, the UK, Australia, and Japan. The Artemis II astronauts took photos on the iPhone 17 Pro Max during their trip around the moon—a detail Cook couldn’t resist mentioning.
The MacBook Neo caught Apple off guard
The MacBook Neo, Apple’s new entry-level laptop at $599, was perhaps the quarter’s most interesting subplot. Apple launched it during Q1 and promptly ran out. Cook admitted the company “undercalled the level of enthusiasm” for the device. Shipping times stretched into weeks, and school districts that typically buy Chromebooks began switching over. Kansas City Public Schools was cited as one example moving their high schoolers to the Neo from Windows and Google hardware.Mac revenue for the quarter came in at $8.4 billion, up 6% year over year, with March quarter records for both upgraders and customers new to the Mac. The Mac mini and Mac Studio are in a similar bind. Both have become popular platforms for running local AI models and agentic tools, and demand outpaced what Apple predicted. Cook warned that supply-demand balance on those two machines could take several months to restore. Apple has already stopped accepting orders for some higher-RAM Mac Studio configurations entirely.
Memory costs are the thing Apple can’t ignore
Ask Apple executives about the June quarter and one word keeps coming up: memory. The global shortage of DRAM—driven by AI server demand eating up supply—is squeezing consumer device makers, and Apple isn’t immune. The company absorbed some of the cost in Q2 through carry-in inventory it had stockpiled, but CFO Kevan Parekh was direct: expect “significantly higher memory costs” in Q3. Beyond June, he said those costs will have an “increasing impact” on the business.“We will look at a range of options. I don’t really want to go beyond that.” —Tim Cook, on managing rising memory costsProduct gross margin already took a 200 basis point sequential dip, partly due to memory. The company’s overall gross margin held at 49.3%—up 110 basis points from Q1—thanks to favorable foreign exchange and lower tariff-related costs softening the blow. For Q3, Apple guided gross margin between 47.5% and 48.5%. Whether Apple passes any of those memory costs on to consumers through pricing is the question analysts are circling. Cook declined to give a straight answer, saying only that the company will “evaluate a range of options.”
China grew 28%. India, Cook says, is “over the moon” territory.
Greater China brought in $20.5 billion, up 28% year over year, a March quarter record and a $4.4 billion jump from the same period last year. Cook pushed back on the idea that easing US-China tensions were the main driver, saying the performance came down to products that resonated with customers. The iPhone 17 was the top-selling model in urban China. The Mac mini topped the desktop category. MacBook Air led laptops. Store traffic in China grew by double digits during the quarter, partly buoyed by Apple’s 50th anniversary celebrations.India, meanwhile, is shaping up as a major growth frontier. Cook called it the world’s second-largest smartphone market and third-largest PC market, and said Apple’s share remains modest, which he framed as opportunity, not a problem. iPad revenue in India grew by double digits, alongside Mexico and Thailand. “There are a lot of people moving into the middle class there, and we’ve got some great products for them, both currently and coming,” Cook said. “I’m over the moon excited about India.”
Services keep growing, and Apple is quietly building an ads business
Services revenue of $31 billion marked another all-time high, up 16% year over year. Apple now has over 2.5 billion active devices in its installed base, also a record, and both transacting accounts and paid subscribers hit new highs in the quarter. The segment’s gross margin came in at 76.7%, up 20 basis points sequentially, driven by mix. Apple Retail also set a March quarter revenue record, with what the company described as “very high levels of store traffic throughout the quarter.“One detail that didn’t get much airtime but matters for Services’ longer-term trajectory: Apple confirmed year-over-year growth in its advertising business, following the addition of new ad placements in App Store search results. This summer, Apple Maps will begin showing ads in the US and Canada during search and discovery moments—a new revenue stream Apple framed carefully as helping businesses reach customers “while preserving the user experience.” The ads push is modest compared to Google’s scale, but it’s a deliberate expansion of a business line Apple has been growing quietly for years.
Tim Cook’s 89th earnings call, and the start of a handoff
The call also carried the weight of a transition. Apple announced earlier in April that Cook will step down as CEO on September 1, becoming Executive Chairman, with hardware engineering chief John Ternus taking over. Ternus made a brief appearance on the call—his first—offering praise for Cook and a tease of Apple’s upcoming product roadmap without specifics. “This is the most exciting time in my 25-year career at Apple to be building products and services,” he said.Cook, for his part, reflected on Steve Jobs’ advice to him when he first took over: not to ask what Jobs would have done, but to do what he thought was best for the company. His advice to Ternus followed a similar spirit. Be deliberate about where you spend your time, and keep the North Star fixed on making the best products in the world. “If you keep focusing on that and make your decisions around that,” Cook said, “it will produce a great business.“Cook’s parting guidance for Q3 points to revenue growth of 14–17% year over year, with operating expenses between $18.8 and $19.1 billion. Apple also authorised a new $100 billion share buyback and raised its dividend 4% to $0.27 per share. One quiet but significant structural change: Apple retired its long-held “net cash neutral” capital allocation target, saying it will now evaluate cash and debt independently to make more optimal decisions. The stock ended the day up around 4% after hours—a fitting send-off for Cook’s penultimate earnings call.
