Apple on Thursday forecast a surge of up to 16% in revenue for the March quarter, well ahead of Wall Street’s expectations, powered by strong demand for its iPhones and a sharp rebound in China.
That followed holiday-quarter results that beat estimates as well, with CEO Tim Cook telling Reuters that demand for the latest handsets was “staggering.”
Apple’s iPhone 17 lineup helped lift sales across key markets, easing investor concerns about a hardware sales plateau. The devices have been well received for their upgraded camera features and performance improvements, with Apple also benefiting from a wave of upgrades from users holding onto older models.
Apple shares rose 3.5% in extended trading after the results were released, but later pared gains to trade up 0.8%.
Apple expects revenue for its fiscal second quarter to grow 13% to 16%, versus a 10% rise that analysts expected, according to LSEG. The company also forecast operating expenses of $18.4 billion to $18.7 billion, slightly above spending in the first quarter.
IPhone revenue rose to $85.27 billion in the fiscal first quarter ended Dec., well above the $78.65 billion analysts had expected. Apple said iPhone sales set records in every geographic segment, highlighting broad-based demand despite macroeconomic uncertainty.
“The demand for iPhone was simply staggering, with revenue growing 23% year over year to achieve its biggest quarter in history,” Cook told Reuters in an interview.
The iPhone maker posted quarterly revenue of $143.8 billion, up 16% from a year earlier, topping analysts’ average estimate of $138.48 billion, according to LSEG. Cook said that the company now has an installed base of 2.5 billion devices.
Earnings per share came in at $2.84, comfortably ahead of the $2.67 consensus.
Apple reported fiscal first-quarter gross margins of 48.2%, above both its own guidance and analyst expectations of 47.45%, according to LSEG data. The result suggests that rising costs for DRAM memory chips and commodities such as gold have not yet shown up in Apple’s results.
“The backdrop of inflation-fatigued consumers and an ongoing memory chip shortage will pressure hardware margins in coming quarters, making that high-margin services momentum even more vital,” said eMarketer analyst Jacob Bourne.
Earlier this month, Apple announced its partnership with Alphabet’s Google, which integrates the Gemini artificial-intelligence models into Apple’s ecosystem, as part of its broader push to bolster AI features. On Thursday, Apple also acquired Q.ai, an AI startup focused on determining speech, moods or heart rates from minute facial expressions, for $1.6 billion in one of its largest-ever deals.
Sales in Greater China jumped 38% year-on-year to $25.53 billion, far exceeding the Visible Alpha estimate of $21.32 billion. Apple has faced pressure in China from local rivals and regulatory scrutiny, but Cook said that the iPhone hit a sales record there and that the iPhone 17 drove double-digit growth in the number of users switching from Android devices.
Apple does not disclose sales figures for India, a key growth market, but Cook told Reuters that the company saw “double-digit” sales growth, with revenue records for iPhones, Macs and other products. He also said Apple plans to open a store in Mumbai.
One notable miss compared with Wall Street expectations came in Apple’s wearables, home and accessories segment, where sales were $11.49 billion, missing expectations of $12.04 billion. Apple last year released a product called AirPods Pro 3 that can translate between languages, and Cook said that demand for the new product caught Apple off guard.
“AirPods Pro 3 were supply-constrained during the quarter, and we think we would have grown year over year if we would not have been constrained,” Cook said.
Mac revenue came in at $8.39 billion, slightly below analysts’ expectations of $8.95 billion.
IPad sales rose to $8.6 billion, beating estimates of $8.13 billion, helped by steady education demand and continued traction for higher-priced iPad Pro models.
Revenue from the services segment, which includes Apple Music, iCloud and other software, climbed to a record $30.01 billion, broadly in line with analysts’ expectations of $30.07 billion.
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