- Apple posted Q2 revenue of $111.2 billion, with iPhone revenue up 21.7% to nearly $57 billion, beating Wall Street estimates and projecting 14-17% revenue growth next quarter.
- Gross margins hit a record 49.3% — an iPhone-era high — but Cook warned memory costs will be “significantly higher” beyond the June quarter, squeezing future profitability.
- Tim Cook announced John Ternus — Apple’s head of hardware engineering — will take over as CEO on September 1, just before the company is expected to launch its first foldable iPhone.
- Supply constraints from TSMC are limiting iPhone production as Nvidia and AI companies compete for the same advanced chip capacity, creating longer Mac wait times and missed demand.
What Happened?
Apple delivered a strong second quarter, with $111.2 billion in revenue and iPhone sales of nearly $57 billion — a 21.7% year-over-year jump fueled by enthusiastic upgrades to the iPhone 17 lineup. Gross margins reached a record 49.3%. China sales were a notable bright spot, pushing Apple to the top global smartphone market share position in the March quarter for the first time, per Counterpoint Research. Apple also projected 14–17% revenue growth for the current quarter — well above analyst estimates of 10% — sending shares higher after hours. On the same call, Tim Cook — marking his 89th earnings call — confirmed that hardware chief John Ternus will become CEO on September 1.
Why It Matters?
Apple’s results show the iPhone 17 upgrade cycle is very much alive, and the company’s premium positioning is protecting it from the memory price shock hammering cheaper Android makers. IDC projects global smartphone shipments will fall 13% in 2026 as memory costs make low-end devices unprofitable; Apple and Samsung are expected to gain share as the market consolidates upward. But Apple isn’t immune: memory costs will be “significantly higher” beyond June, and TSMC capacity competition from AI companies is constraining iPhone supply. The Ternus succession is equally significant — Cook built Apple into a $4 trillion powerhouse; Ternus inherits strong hardware momentum but a genuine AI gap relative to Google and OpenAI that will define his tenure.
What’s Next?
Ternus’s first major moment as CEO-designate will be the launch of Apple’s first foldable iPhone this fall, which Counterpoint projects will capture nearly half of North American foldable smartphone market share for the year. The larger strategic challenge is AI: Apple earns fees from OpenAI for ChatGPT subscriptions through iPhone, but its own AI capabilities — particularly Siri — remain well behind the cutting edge. A smarter Siri is expected later this year, but catching up to Gemini and ChatGPT on underlying model capability is a multi-year effort. How Ternus navigates the AI deficit while managing the memory cost headwind will define his early chapters as CEO.
Source: The Wall Street Journal
