Apple CEO Tim Prepare dinner spoke a few “terrific quarter in India,” because the nation stood out within the iPhone maker’s December-quarter efficiency, which set a income file, fueled by a surge in new consumer adoption.
“We set quarterly income information on iPhone and Mac and iPad. And an all-time income file on companies…We actually like what we see there,” Prepare dinner mentioned, as Apple rides a wave of demand in what’s now the world’s second-largest smartphone market and fourth-largest PC market.
Regardless of that scale, Apple believes it is just scratching the floor. Prepare dinner identified the corporate nonetheless has a “modest share” in India, even after years of regular development. “So we predict there’s a large alternative for us there. And we couldn’t be extra enthusiastic about it,” he mentioned.
A key driver of that chance is first-time patrons. Based on Prepare dinner, “the vast majority of prospects which might be shopping for iPhones and Mac and iPad and Watch are all new to that product,” underlining how Apple is increasing its consumer base quite than merely upgrading current ones.
The corporate can also be deepening its bodily presence to assist that development. “We have been excited to open our fifth retailer in India in December,” Prepare dinner mentioned, including that Apple is planning to open one other retail retailer in Mumbai quickly.
General efficiency
General, Apple reported what Prepare dinner described as a “quarter for the file books,” pushed by a “incredible quarter for iPhone”.
“We’re reporting our best-ever quarter…exceeding our expectations. The demand for iPhone was merely staggering, with income rising 23% year-over-year and all-time information throughout each geographic section,” the Apple chief shared, throughout the firm’s first quarter earnings name.
The California-based firm’s each prime line and backside line surged 16% YoY for the primary quarter of fiscal yr 2026 (Q1 FY26), which ended on December 27. Throughout this era, Apple clocked a income of $143.8 billion and a revenue of $42 billion.
As all the time, the iPhones gross sales have been main these development numbers. “It was a incredible quarter for iPhone with an all-time income file of $85.3 billion…That is the strongest iPhone lineup we’ve ever had and by far the preferred. All through the quarter, buyer enthusiasm for iPhone was merely extraordinary,” Prepare dinner mentioned.
In the meantime, Apple’s companies section continued its regular climb, cementing its function as a key income driver. Within the first quarter, companies income set an all-time file, rising 14% YoY to $30 billion.
iPad income elevated 6% YoY to $8.6 billion, with an all-time file for upgraders. Nevertheless, Mac income was down 7% YoY to $8.4 billion, attributed to robust comparisons in opposition to prior-year launches regardless of continued rising market development.
Income from wearables, dwelling, and equipment section fell 2% YoY to $11.5 billion. Apple CFO Kevan Parekh mentioned the class was impacted by AirPods Professional 3 provide constraints, and that the group would have grown in any other case.
Each Prepare dinner and Parekh addressed provide constraints on superior silicon nodes and forecasted ongoing gross margin pressures because of rising reminiscence prices.
“…iPhone grew 23%. What the results of that was that we exited December with very lean channel stock because of that staggering degree of demand. And based mostly on that, we’re in a provide chase mode to satisfy the very excessive ranges of buyer demand,” Prepare dinner famous.
“We’re at present constrained, and at this level, it’s troublesome to foretell when provide and demand will stability. The constraints that we’ve are pushed by the provision of the superior nodes that our SoCs are produced on. And presently, we’re seeing much less flexibility within the provide chain than regular, partly due to our elevated demand,” he elaborated.
The Apple chief mentioned reminiscence had a minimal affect on Q1 however the firm expects it to be a “bit extra of an affect on the Q2 gross margin”. “Past Q2, we do proceed to see market pricing for reminiscence growing considerably,” he added.
Google-powered Siri
The much-anticipated Siri upgrades unveiled on the Worldwide Builders Convention in 2024, together with extra pure conversational talents and on-device processing via Apple Intelligence, are but to be launched in a public software program replace.
To deal with this, Apple earlier this month entered right into a multi-year partnership with Google to make use of the latter’s Gemini fashions for its revamped Siri, which is anticipated to roll out later in 2026.
“We mainly decided that Google’s AI know-how would supply essentially the most succesful basis for Apple basis fashions. And we imagine that we are able to unlock lots of experiences and innovate in a key means as a result of collaboration. We’ll proceed to run on the machine and personal cloud compute,” Prepare dinner mentioned, including “We’ll clearly proceed to do a few of our personal stuff.”
Apple continued with a hybrid capital expenditure (CapEx) strategy, supported by latest investments in personal cloud information facilities to energy new AI capabilities.
The CFO mentioned the corporate follows a “hybrid mannequin for CapEx,” noting that spending might be “risky, impartial of the quantity efficiency of our enterprise,” because it spans a number of areas together with tooling, services, retail investments and information facilities.
Parekh added that Apple depends on a mix of first- and third-party capability for tooling and information centres, making CapEx tendencies troublesome to interpret in isolation.
“Final yr, you’ll bear in mind we did construct out our personal cloud compute setting,” he famous, with these investments displaying up within the December-quarter outcomes.
In contrast to friends resembling Microsoft, Alphabet, Meta, and Amazon, that are investing tens of billions in AI-focused servers and information centre growth, Apple’s capital spending has remained focused on manufacturing capability, retail growth, and ongoing operations, with solely selective investments in AI.
In the meantime, Apple has acquired Israeli AI audio startup Q.ai, although it didn’t disclose the phrases of the deal. The corporate was valued at about $1.6 billion, in response to Reuters.
Outlook
“We anticipate our March complete firm income to develop by 13% to 16% yr over yr, which comprehends our greatest estimates of constrained iPhone provide throughout the quarter,” Parekh remarked.
He mentioned the corporate expects gross margin to be between 48% and 49%, and working bills to vary from $18.4 billion to $18.7 billion. These bills are broadly in keeping with December ranges and mirror greater year-over-year spending on analysis and growth, he added.
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