Apple on Thursday afternoon reported quarterly revenue of $97.4 billion for its fiscal second quarter ending March 29, 2026 — a 6.1% increase year-over-year — beating analyst consensus of $95.8 billion. Earnings per share came in at $1.72, ahead of the $1.65 estimate, as Services revenue hit a new record of $27.8 billion, up 14.2% from the prior year period.
Services Becomes the Growth Engine
For the third consecutive quarter, Services was Apple’s fastest-growing segment and the primary driver of margin expansion. The division — which encompasses the App Store, Apple TV+, Apple Music, iCloud, Apple Intelligence subscriptions, and financial products — now contributes 28.6% of total revenue, up from 26.4% a year ago. Operating margin for Services reached 37.1%, substantially higher than the hardware segments.
Apple Intelligence, the company’s on-device AI platform launched in late 2025, is beginning to convert into measurable retention and monetization. During the earnings call, CEO Tim Cook noted that iPhone customers using Apple Intelligence features show a 23% lower churn rate versus non-AI users after 12 months. The company declined to disclose how many of its estimated 1.5 billion active iPhone users have enabled Apple Intelligence, but CFO Kevan Parekh confirmed “tens of millions” of users have purchased at least one premium AI add-on feature in the past two quarters.
Hardware Holds Steady Under Tariff Pressure
The iPhone segment delivered $46.8 billion in revenue, essentially flat year-over-year at -0.3%, a result that analysts characterized as strong given the macroeconomic backdrop. The March quarter is seasonally Apple’s weakest for iPhone, but the company has benefited from sustained demand for the iPhone 17 Pro lineup introduced in September 2025, which starts at $1,099.
Apple’s supply chain strategy has helped insulate it from the full brunt of the US-China tariff regime that has disrupted competitors. The company now assembles approximately 18% of iPhones destined for US sale in India, up from 12% a year ago, with a target of 25% by the end of calendar 2026. Cook acknowledged “ongoing cost pressures” from tariffs but said Apple is not currently planning to pass those costs to consumers.
Mac revenue reached $8.1 billion, up 8.7%, driven by the M4 Mac Studio and updated MacBook Pro lineup. iPad revenue of $6.4 billion grew 5.2% year-over-year. Wearables and accessories slipped 2.1% to $8.3 billion amid what Apple described as a “maturing” smartwatch market, though the Vision Pro spatial computing platform contributed an undisclosed but “growing” share.
Geographic Breakdown and China Concern
Growth was notably uneven across geographies. Americas revenue rose 8.4% to $42.3 billion. Europe delivered $23.7 billion, up 4.6%, partly suppressed by unfavorable currency translation as the euro strengthened against the dollar. Greater China remained the soft spot at $16.8 billion, down 2.9% year-over-year, reflecting continued competition from Huawei’s Mate and Pura series and the slower-than-expected rollout of Apple Intelligence in Mandarin.
Apple reiterated that full Chinese-language Apple Intelligence support — requiring regulatory approval and local data partnerships — remains on track for a late 2026 release. Analysts estimate that restoring meaningful AI feature parity in China is worth between $2 billion and $3.5 billion in annual Services revenue upside.
Outlook and Capital Return
For the June quarter, Apple guided revenue in the range of $98 billion to $102 billion, implying year-over-year growth of 4% to 8%. The midpoint of $100 billion, if achieved, would mark the first time Apple crosses the $100 billion quarterly revenue threshold in a non-holiday quarter.
The company announced a new $110 billion share buyback authorization — its largest ever — alongside a 4% increase in the quarterly dividend to $0.27 per share. Apple has now returned more than $850 billion to shareholders in cumulative buybacks and dividends since 2012.
Apple shares rose 3.4% in after-hours trading on Thursday to approximately $218, recovering from a 7% decline earlier in the month tied to tariff uncertainty. The stock remains up roughly 11% year-to-date, underperforming the Nasdaq’s 15% gain but outperforming most hardware-exposed peers.
Sources: Apple Q2 FY2026 earnings release; Apple investor relations call transcript, April 24, 2026; Bloomberg consensus estimates; IDC smartphone market data Q1 2026.
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