Apple Earnings Beat Estimates as iPhone Sales Surge, China Revenue Jumps

Apple Earnings Beat Estimates as iPhone Sales Jump 23%, China Revenue Surges 38%

Apple Inc. (AAPL) reported blockbuster fiscal Q1 earnings on Thursday, beating Wall Street expectations as iPhone sales rebounded sharply and demand surged in China. The company posted 16% year-over-year revenue growth, signaling a strong recovery after last year’s softer holiday quarter.

Apple shares climbed more than 1% in after-hours trading following the earnings release.

Apple Q1 Earnings Snapshot

Earnings Per Share (EPS): $2.84 vs. $2.67 estimated

Revenue: $143.76 billion vs. $138.48 billion estimated

Net Income: $42.1 billion (up from $36.33 billion YoY)

Gross Margin: 48.2% vs. 47.5% expected

iPhone Revenue Soars on iPhone 17 Demand

Apple’s flagship product powered results, with iPhone revenue surging 23% year over year to $85.27 billion, far exceeding analyst estimates of $78.65 billion. The growth was driven by strong global demand for the iPhone 17 series, launched in September.

“The demand for iPhone was simply staggering,” Apple CEO Tim Cook said, marking a major turnaround from last year’s holiday season when iPhone sales dipped slightly.

Apple China Sales Jump 38% as Upgrades Hit Record

Apple delivered standout performance in Greater China, including mainland China, Taiwan, and Hong Kong. Revenue in the region jumped 38% to $25.53 billion, driven primarily by strong iPhone sales.

Cook said Apple set an all-time record for iPhone upgraders in mainland China, while also seeing double-digit growth in customers switching from competing smartphone brands.

Apple Product Revenue Breakdown

iPhone: $85.27 billion (+23% YoY)

Mac: $8.39 billion (–7% YoY, below estimates)

iPad: $8.6 billion (+6% YoY, beat estimates)

Wearables, Home & Accessories: $11.49 billion (–2% YoY)

Services: $26.34 billion (+14% YoY)

Apple’s Services segment, which includes Apple TV+, iCloud, Apple Music, AppleCare, and advertising, continued its steady expansion. Cook noted that Apple TV+ viewership rose 36% in December year over year.

Apple Installed Base Reaches 2.5 Billion Devices

Apple’s active installed base grew to 2.5 billion devices worldwide, up from 2.35 billion last year. The expanding ecosystem strengthens Apple’s long-term services revenue and customer retention strategy.

Apple Revenue Forecast and AI Strategy

For the current quarter, Apple expects revenue growth of 13% to 16% year over year, equivalent to $107.8 billion to $110.66 billion, exceeding analyst expectations of $104.84 billion. However, Apple warned of temporary iPhone supply constraints.

Earlier this month, Apple announced a partnership with Google to integrate the Gemini AI model into Apple Intelligence. Despite spending less on AI infrastructure than rivals like Meta and Microsoft, Cook emphasized Apple’s confidence in its platforms.

“We have absolutely the best platforms in the world for AI,” Cook said.

Rising Costs and Supply Chain Pressures

Apple reported capital expenditures of $2.37 billion, down from last year, while research and development spending increased to $10.89 billion. The company returned nearly $32 billion to shareholders through dividends and share buybacks.

Executives also flagged rising memory and advanced chip manufacturing costs, driven by global AI-related shortages, warning that cost pressures could increase in the current quarter.

“At this point, it’s difficult to predict when supply and demand will balance,” Cook said.