Apple AAPL delivered second-quarter fiscal 2026 earnings of $2.01 per share, up 21.8% year over year and 4.7% above the Zacks Consensus Estimate. Revenues rose 16.6% from the year-ago quarter to $111.18 billion, coming in 2.3% ahead of the consensus mark.
Overall, product sales (72.1% of sales) increased 16.7% year over year to $80.21 billion. Services revenues grew 14% year over year to $30.01 billion and accounted for 20.9% of sales.
The quarter’s outperformance reflected broad-based demand across Apple’s portfolio, supported by an installed base that climbed to an all-time high of more than 2.5 billion active devices.
AAPL's iPhone Cycle Drives March Quarter Records
iPhone remained the central growth engine, with revenues of $56.99 billion, up 21.7% year over year and setting a March quarter record. Management credited strong customer response to the iPhone 17 family, including upgrades and first-time iPhone buyers across multiple geographies.
Apple Inc. Price, Consensus and EPS Surprise
Apple Inc. price-consensus-eps-surprise-chart | Apple Inc. Quote
Apple also noted it faced supply constraints in the quarter, primarily tied to the availability of advanced-node system-on-chip capacity. Even with those constraints, iPhone delivered double-digit growth across a wide mix of markets, highlighting resilient demand and continued share momentum.
Apple Benefits From iPad and MacBook Sales Growth
iPad sales of $6.91 billion increased 8% year over year and accounted for 6.2% of net sales.
MacBook sales of $8.4 billion increased 5.7% year over year and accounted for 7.6% of net sales.
Wearables, Home and Accessories sales climbed 5% year over year to $7.90 billion and accounted for 7.1% of net sales.
Apple Services Scale Supports Mix and Engagement
Services revenue marked an all-time record in the reported quarter. Apple pointed to double-digit growth across developed and emerging markets, with strength spread across most services categories.
Advertising was one notable contributor within Services. Apple highlighted year-over-year growth in its advertising business alongside expanded App Store search placements and plans to introduce ads in Apple Maps during search and discovery moments in the U.S. and Canada, while emphasizing privacy and customer experience.
Apple’s Q2 Rides on Strong Greater China Sales
Greater China sales jumped 28.1% year over year to $20.497 billion and accounted for 18.4% of sales. Rest of Asia Pacific sales increased 25.3% year over year to $9.14 billion and contributed 8.2% of total sales.
Europe’s sales grew 14.7% year over year to $28.06 billion in the reported quarter and accounted for 25.2% of net sales.
Americas’ sales were $45.09 billion, up 11.9% year over year and accounted for 40.6% of sales. Japan sales increased 15.1% year over year to $8.40 billion and accounted for 7.6% of sales.
AAPL Margins Hold Firm as Operating Costs Rise
Gross margin came in at 49.3%, above the high end of Apple’s guidance range, benefiting from mix and other cost dynamics. Services gross margin was 76.7%, underscoring the profitability of the recurring business, while Products gross margin was 38.7%, reflecting pressures that included higher component costs.
Operating expenses surged 23.7% year over year to $18.896 billion due to a 33.6% increase in research & development (R&D) expenses and 11.1% growth in selling, general & administrative (SG&A) expenses. Management attributed the result partly to a one-time SG&A expense, while also underscoring that investment levels are rising, particularly in R&D, as Apple scales efforts across products and services.
Operating margin expanded 120 bps on a year-over-year basis to 32.2%.
Apple Capital Returns Expand With Dividend and Buyback
Apple ended the quarter with $147 billion in cash and marketable securities and total debt of $85 billion, leaving net cash at $62 billion. During the quarter, the company returned $15 billion to shareholders, combining dividends and open-market repurchases.
The board also raised the quarterly dividend by 4% to 27 cents per share and authorized an additional $100 billion for share repurchases. Management reiterated its long-standing approach of prioritizing investment needs first and returning excess cash over time, while shifting away from “net cash neutral” as a formal target in favor of evaluating cash and debt independently.
Apple Outlook Targets Mid-Teens Growth Amid Constraints
For the June quarter, Apple expects revenues to grow 14% to 17% year over year, with gross margin guided to 47.5% to 48.5%. Operating expenses are expected between $18.8 billion and $19.1 billion, with other income and expense around $250 million and a tax rate near 17%.
The outlook assumes tariff policies and the macro environment remain consistent with conditions as of the call. Apple also said supply constraints are expected to be concentrated in several MacBook models given stronger-than-anticipated demand, while also flagging that memory-cost pressure is expected to increase beyond the June quarter.
Apple Leadership Transition Sets a New Backdrop
Management also used the call to discuss a planned leadership transition. Tim Cook said he intends to become executive chairman on Sept. 1, with longtime hardware executive John Ternus set to step into the CEO role.
The company framed the change as occurring from a position of strength, citing strong first-half performance and a robust product roadmap, while emphasizing continuity in financial discipline and capital allocation.
Zacks Rank & Stocks to Consider
Currently, Apple carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Computer and Technology sector that are set to report their quarterly results are Advanced Micro Devices AMD, Arista Networks ANET and BlackLine BL. Each of the three stocks carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AMD, Arista Networks and BlackLine are set to report their respective quarterly results on May 5. Year to date, shares of AMD and Arista Networks have jumped 65.6% and 31.9%, respectively, while BlackLine has dropped 43.4%.
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This article originally published on Zacks Investment Research (zacks.com).