Apple Q1 2026 Earnings Show iPhone Strength

Apple Inc. (AAPL) reported fiscal first-quarter 2026 results on January 29, showing record quarterly sales driven by strong iPhone demand. The company posted revenue of $143.8 billion, a 16.0% increase year over year, lifting profits despite management’s caution that rising component costs and supply constraints could pressure margins as it pursues AI partnerships.

iPhone Sales Propel Record Revenue and Profit

Apple’s revenue reached an all-time high of $143.8 billion, led by iPhone sales of $85.3 billion, up 23.0% from a year earlier and marking the product’s best quarter ever. The company set records across all geographic segments, including a 38.0% increase in Greater China. Net income rose 19.0% to $42.1 billion, with diluted earnings per share of $2.84.

Services revenue climbed 14.0% to $30.0 billion, also an all-time record, supported by an active installed base exceeding 2.5 billion devices. Mac, iPad, and Wearables, Home and Accessories generated $8.4 billion, $8.6 billion, and $11.5 billion, respectively. iPad sales increased 6.0%, while Wearables declined 2.0%.

The strong iPhone performance contributed to a broader revenue mix that supports recurring sales from Services and the installed base, even as management balances near-term cost pressures against longer-term software and services monetization.

Margins, Guidance, and Capital Allocation

Gross margin expanded to 48.2% from 46.9% a year earlier. For the March quarter, Apple guided revenue growth of 13.0% to 16.0% year over year, gross margin between 48.0% and 49.0%, and operating expenses of $18.4 billion to $18.7 billion. The company expects a tax rate near 17.5%. Executives noted that rising costs and supply constraints, including tighter availability of advanced-node system-on-chip components, could weigh on margins within that guidance.

Operating cash flow reached a record roughly $54.0 billion. Apple returned $32.0 billion to shareholders, including $3.9 billion in dividends and $25.0 billion in share repurchases covering 93 million shares. The company held $145.0 billion in cash and marketable securities and maintained a net cash position of $54.0 billion against $91.0 billion in total debt. The board declared a dividend of $0.26 per share payable February 12, 2026, with a record date of February 9.

Management signaled plans for increased research and development spending within the operating-expense guidance. The company is pursuing a reported multi-year partnership with Google’s Gemini AI to power the next generation of Siri. Secondary sources estimate the deal at about $1.0 billion annually, involving a 1.2-trillion-parameter model running on private cloud compute. Apple plans to release iOS 26.4 in February 2026 for certain models.

The results highlight a near-term tradeoff: exceptional top-line momentum driven by iPhone sales and a growing services base supports significant shareholder returns and elevated investment, while rising component costs and supply constraints could compress margins.

"Today, Apple is proud to report a remarkable, record-breaking quarter," Chief Executive Tim Cook said in the company’s press release.