Apple Inc.'s (AAPL.US) Q1 performance significantly exceeded expectations: The strongest quarter in iPhone history drove revenue to a new high, with sales in Greater China rebounding strongly, soaring 38% year-on-year.

On Thursday evening Eastern Time, after the US stock market closed, Apple Inc. (AAPL.US) released its financial report for the first quarter of fiscal year 2026. Driven by strong sales of the iPhone 17 series, the company achieved record holiday season revenue highs, with the Greater China market experiencing a 38% year-on-year surge. Additionally, Apple Inc. also provided revenue guidance for the second quarter that exceeded expectations, dispelling concerns in the market about the company's hardware growth reaching its peak. Performance Overview: "Explosive" iPhone Demand Drives Record Growth The financial report showed that in the first fiscal quarter ending December 27, 2025, Apple Inc. achieved record total revenue of $143.8 billion, a 16% year-on-year increase, far surpassing the analysts' average expectation of $138.4 billion and higher than the company's prior guidance of 10%-12% growth. Earnings per share were $2.84, also exceeding the market's expectation of $2.68 per share. As the core revenue driver for Apple Inc., the iPhone business saw explosive growth in this quarter, generating revenue of $85.3 billion, a 23% year-on-year increase, significantly surpassing analysts' expectations of $78.2 billion and achieving the best quarterly performance in history. Apple Inc. CEO Tim Cook stated that the market demand for the iPhone 17 series was "explosive," setting sales records in all geographic regions worldwide, with the high-end versions being particularly popular and key drivers of revenue and profit. This achievement also helped Apple Inc. surpass Samsung (SSNLF.US) in smartphone market sales globally in recent months, reclaiming the top spot. Cook revealed that the installed base of Apple Inc.'s entire ecosystem has now reached 2.5 billion devices. The Greater China region became the standout in this financial report, with revenue reaching $25.5 billion, a 38% year-on-year increase, significantly exceeding the market's expectation of $21.8 billion. Cook pointed out that the iPhone set sales records in this region and drove a double-digit increase in the conversion of Android users to the Apple Inc. ecosystem. In addition, although Apple Inc. did not disclose specific sales data for the Indian market, Cook revealed that the company achieved "double-digit" sales growth in India, with products such as the iPhone and Mac setting revenue records. The company also plans to open its second offline store in Mumbai, which will be Apple Inc.'s sixth store in India. Apart from the iPhone, Apple Inc.'s services business (including Apple Music, iCloud, the App Store, etc.) continued its steady growth trajectory, with revenue reaching $30 billion in this quarter, a 14% year-on-year increase and a record high, essentially meeting the market's expectation of $30.7 billion. The iPad business also achieved growth that exceeded expectations, with revenue of $8.6 billion, a 6.3% year-on-year increase, higher than the expected $8.18 billion, mainly due to stable demand in the education market and the continued popularity of the high-end iPad Pro models. However, Apple Inc. faced some business weaknesses in this quarter, with Mac business revenue at $8.39 billion, lower than the market's expectation of $9.13 billion; and wearables, home, and accessories business performance was lackluster, with revenue of $11.5 billion, a slight 2.2% year-on-year decrease, also falling short of analysts' expectations of $12.1 billion. Cook explained that the strong demand for the new AirPods Pro 3, which feature real-time translation, exceeded the company's expectations, leading to supply shortages for the product. Excluding supply chain factors, this business could have achieved a year-on-year growth. Future Outlook and Strategic Deployment For future performance, Apple Inc. provided guidance that exceeded expectations, estimating that revenue for the second quarter of fiscal year 2026 will achieve a 13%-16% year-on-year increase, significantly higher than Wall Street's expectation of 10%. Operating expenses are expected to be between $18.4 billion and $18.7 billion, slightly higher than in the first quarter. It is worth noting that Apple Inc.'s gross profit margin for the first quarter reached 48.2%, not only higher than the company's prior guidance but also surpassing analysts' expectations of 47.45%. This performance indicates that the rising costs of commodities such as DRAM chips and gold have not yet had a significant impact on Apple Inc.'s profitability. However, market research firm eMarketer analyst Jacob Bourne stated, "Consumers are showing fatigue towards inflation, coupled with the continuous shortage of storage chips. In the coming quarters, Apple Inc.'s hardware business gross profit margin may face pressure. Therefore, whether the high gross profit margin services business can continue its growth momentum becomes increasingly critical." Cook did not comment on the issue of storage chip prices in his interviews. In terms of artificial intelligence (AI) strategy, Apple Inc. has been active recently. In addition to announcing a partnership with Alphabet Inc. Class C (GOOGL.US) to integrate the Gemini AI model into its ecosystem, the company also announced the acquisition of the AI startup Q.ai, which focuses on analyzing emotions through microexpressions and other technologies, for approximately $1.6 billion on the same day as the financial report release. These moves aim to enhance its AI capabilities to compete and explore new growth areas. Following the financial report release, Apple Inc.'s stock price rose by 3.5% in after-hours trading, narrowing the gain afterwards. As of the time of this writing, the company's stock price had risen by approximately 0.8%.