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Apple Q4 Earnings Beat Estimates, iPhone Drives Top-Line Growth
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Key Takeaways
Apple's Q4 EPS rose 13.5% to $2.10, while revenues climbed 11.7% to $114.48 billion.
iPhone sales jumped 17.5% to $57.58 billion, while Mac sales surged 23.7% and Services hit a record high.
Apple projects 7%-10% revenue growth in Q1 fiscal 2027, but higher memory costs and supply constraints loom.
Apple (AAPL - Free Report) reported fourth-quarter fiscal 2026 earnings of $2.10 per share, up 13.5% year over year. Excluding a 5-cent benefit from tariff refunds, earnings were $2.05 per share, beating the Zacks Consensus Estimate by 3.5%.
Net sales increased 11.7% year over year to $114.48 billion, surpassing the consensus mark by 1.3%. The results reflected strong iPhone and Mac demand, alongside record Services revenues. Apple's installed base exceeded 2.5 billion active devices, reaching an all-time high across major product categories and geographic segments.
Product sales increased 12.5% year over year to $82.90 billion and accounted for 72.4% of total revenues. iPhone remained the primary growth driver, with sales rising 17.5% year over year to $57.58 billion, setting a September-quarter record despite supply constraints and foreign exchange headwinds.
Mac revenues surged 23.7% year over year to $10.79 billion, driven by MacBook Neo and MacBook Pro. Apple achieved a September-quarter record for customers new to Mac. Management highlighted strong emerging-market performance, with all-time revenue records in India and Southeast Asia.
Apple’s Services Reach New Revenue High
Services revenues advanced 9.8% year over year to an all-time record of $31.57 billion. The business represented 27.6% of total sales, supported by strong performance across video, cloud services, payment services and advertising.
Paid subscriptions exceeded 1.5 billion, growing double digits during the quarter. Transacting and paid accounts also reached record highs. However, foreign exchange headwinds, mobile gaming weakness and App Store business model changes in certain markets remained challenges.
AAPL’s Other Product Categories Show Weakness
iPad sales declined 10.4% year over year to $6.23 billion, reflecting supply constraints and a difficult comparison with the prior-year launch of the A16-powered iPad. Nevertheless, the installed base reached a record, and more than half of quarterly buyers were new customers.
Wearables, Home and Accessories revenues decreased 7.9% year over year to $8.30 billion. The decline reflected challenging comparisons with the previous year's launches of Watch SE 3 and AirPods Pro 3. The wearables installed base nevertheless reached an all-time high.
Apple’s Geographic Revenues Grow Across Markets
Americas revenues increased 10.2% year over year to $48.68 billion, remaining Apple's largest geographic market. Europe sales climbed 11.5% to $32.01 billion.
Greater China revenues jumped 21% to $17.54 billion, supported by strong iPhone and Mac performance. Japan sales declined 1.4% to $6.54 billion, while Rest of Asia Pacific revenues increased 15.0% to $9.71 billion. Management highlighted a quarterly revenue record in Greater China and an all-time record in India.
AAPL’s Margins Face Higher Memory Costs
Gross margin expanded 70 basis points (bps) year over year to 47.9%, including approximately 1 percentage point of favorable impact from tariff refunds. Products gross margin was 37.2%, while Services gross margin reached 76.0%, increasing 40 bps sequentially.
Operating expenses increased 20.6% year over year to $19.19 billion. Research and development expenses surged 32.3% to $11.73 billion, reflecting continued investments in AI. Selling, general and administrative expenses rose 5.8% to $7.46 billion.
Operating income increased 9.9% year over year to $35.63 billion.
Apple’s Cash Flow Supports Shareholder Returns
Apple ended the quarter with $137 billion in cash and marketable securities and $80 billion in total debt. Operating cash flow totaled $28.1 billion, reflecting strong cash generation despite higher operating costs.
The company returned $28 billion to shareholders, including $24 billion through share repurchases and $3.9 billion in dividends and equivalents. The board declared a quarterly dividend of 27 cents per share, payable Nov. 16, 2026.
AAPL’s Outlook Reflects Supply and Cost Pressures
For the first quarter of fiscal 2027, Apple expects revenues to increase 7% to 10% year over year, reflecting continued supply constraints. Services revenues are projected to grow 8% to 9%, with foreign exchange and third-party licensing creating sequential headwinds.
Gross margin is expected between 45% and 46%, primarily reflecting higher memory costs and expenses associated with Siri AI. Operating expenses are projected between $20.4 billion and $20.8 billion.
Apple expects continued memory-related pressure despite offsets from product pricing adjustments, carry-in inventory and lower non-memory component costs. Supply constraints on Mac and iPad are also expected to persist during the December quarter, while investments in AI continue.
Forgent Power, Telos and NVIDIA are expected to report their quarterly results on Nov. 12, 9 and 17, respectively. Forgent Power shares have dropped 15.3% year to date (YTD). Telos shares have inched up 2.2% YTD, while NVIDIA shares have climbed 8.4% YTD.
View the Zacks #1 Rank List
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Apple Q4 Earnings Beat Estimates, iPhone Drives Top-Line Growth
Key Takeaways
Apple (AAPL - Free Report) reported fourth-quarter fiscal 2026 earnings of $2.10 per share, up 13.5% year over year. Excluding a 5-cent benefit from tariff refunds, earnings were $2.05 per share, beating the Zacks Consensus Estimate by 3.5%.
Net sales increased 11.7% year over year to $114.48 billion, surpassing the consensus mark by 1.3%. The results reflected strong iPhone and Mac demand, alongside record Services revenues. Apple's installed base exceeded 2.5 billion active devices, reaching an all-time high across major product categories and geographic segments.
Apple Inc. Price, Consensus and EPS Surprise
Apple Inc. price-consensus-eps-surprise-chart | Apple Inc. Quote
AAPL’s iPhone and Mac Revenues Drive Growth
Product sales increased 12.5% year over year to $82.90 billion and accounted for 72.4% of total revenues. iPhone remained the primary growth driver, with sales rising 17.5% year over year to $57.58 billion, setting a September-quarter record despite supply constraints and foreign exchange headwinds.
Mac revenues surged 23.7% year over year to $10.79 billion, driven by MacBook Neo and MacBook Pro. Apple achieved a September-quarter record for customers new to Mac. Management highlighted strong emerging-market performance, with all-time revenue records in India and Southeast Asia.
Apple’s Services Reach New Revenue High
Services revenues advanced 9.8% year over year to an all-time record of $31.57 billion. The business represented 27.6% of total sales, supported by strong performance across video, cloud services, payment services and advertising.
Paid subscriptions exceeded 1.5 billion, growing double digits during the quarter. Transacting and paid accounts also reached record highs. However, foreign exchange headwinds, mobile gaming weakness and App Store business model changes in certain markets remained challenges.
AAPL’s Other Product Categories Show Weakness
iPad sales declined 10.4% year over year to $6.23 billion, reflecting supply constraints and a difficult comparison with the prior-year launch of the A16-powered iPad. Nevertheless, the installed base reached a record, and more than half of quarterly buyers were new customers.
Wearables, Home and Accessories revenues decreased 7.9% year over year to $8.30 billion. The decline reflected challenging comparisons with the previous year's launches of Watch SE 3 and AirPods Pro 3. The wearables installed base nevertheless reached an all-time high.
Apple’s Geographic Revenues Grow Across Markets
Americas revenues increased 10.2% year over year to $48.68 billion, remaining Apple's largest geographic market. Europe sales climbed 11.5% to $32.01 billion.
Greater China revenues jumped 21% to $17.54 billion, supported by strong iPhone and Mac performance. Japan sales declined 1.4% to $6.54 billion, while Rest of Asia Pacific revenues increased 15.0% to $9.71 billion. Management highlighted a quarterly revenue record in Greater China and an all-time record in India.
AAPL’s Margins Face Higher Memory Costs
Gross margin expanded 70 basis points (bps) year over year to 47.9%, including approximately 1 percentage point of favorable impact from tariff refunds. Products gross margin was 37.2%, while Services gross margin reached 76.0%, increasing 40 bps sequentially.
Operating expenses increased 20.6% year over year to $19.19 billion. Research and development expenses surged 32.3% to $11.73 billion, reflecting continued investments in AI. Selling, general and administrative expenses rose 5.8% to $7.46 billion.
Operating income increased 9.9% year over year to $35.63 billion.
Apple’s Cash Flow Supports Shareholder Returns
Apple ended the quarter with $137 billion in cash and marketable securities and $80 billion in total debt. Operating cash flow totaled $28.1 billion, reflecting strong cash generation despite higher operating costs.
The company returned $28 billion to shareholders, including $24 billion through share repurchases and $3.9 billion in dividends and equivalents. The board declared a quarterly dividend of 27 cents per share, payable Nov. 16, 2026.
AAPL’s Outlook Reflects Supply and Cost Pressures
For the first quarter of fiscal 2027, Apple expects revenues to increase 7% to 10% year over year, reflecting continued supply constraints. Services revenues are projected to grow 8% to 9%, with foreign exchange and third-party licensing creating sequential headwinds.
Gross margin is expected between 45% and 46%, primarily reflecting higher memory costs and expenses associated with Siri AI. Operating expenses are projected between $20.4 billion and $20.8 billion.
Apple expects continued memory-related pressure despite offsets from product pricing adjustments, carry-in inventory and lower non-memory component costs. Supply constraints on Mac and iPad are also expected to persist during the December quarter, while investments in AI continue.
Zacks Rank & Upcoming Earnings to Watch For
Currently, Apple carries a Zacks Rank #3 (Hold).
Forgent Power Solutions (FPS - Free Report) , Telos (TLS - Free Report) and NVIDIA (NVDA - Free Report) are some better-ranked stocks in the broader Zacks Computer and Technology sector. While Forgent Power and Telos sport a Zacks Rank #1 (Strong Buy) each at present, NVIDIA carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Forgent Power, Telos and NVIDIA are expected to report their quarterly results on Nov. 12, 9 and 17, respectively. Forgent Power shares have dropped 15.3% year to date (YTD). Telos shares have inched up 2.2% YTD, while NVIDIA shares have climbed 8.4% YTD.