Apple beats estimates on earnings and revenue

Apple reported its second-quarter earnings Thursday, beating analysts’ expectations in its first earnings release since Tim Cook announced he’d be stepping down as CEO.

The iPhone maker posted earnings per share of $2.01, compared with the FactSet analyst consensus estimate of $1.95, on $111.2 billion of revenue, versus analysts’ forecast of $109.5 billion. Revenue was a record in the March quarter. The company’s gross margin grew to 49% from 47% a year earlier.

Shares were down 0.7% shortly after the report.

The company also delivered record Q2 iPhone revenue of $56.99 billion, compared with FactSet’s consensus expectation of $56.5 billion, as the iPhone 17 continued to perform well globally.

Beyond hardware, Wall Street is keeping a close eye on Apple’s Services segment, which includes the App Store, iCloud, and Apple Music. Services, which reached an all-time high last quarter, have become the company’s most reliable growth engine and a massive booster to overall gross margins, especially as hardware sales face longer upgrade cycles.

In China, where the company is on its way to becoming the smartphone market leader, Apple’s revenue was $20.5 billion, versus the Street’s $19 billion forecast. Apple is expected to debut a foldable iPhone later this year — which could be another boost to its sales in China, the biggest market for foldable phones.

On the earnings call, Apple’s incoming CEO, John Ternus, will make a cameo. Investors will be looking to him for direction on the future of the company.

They’ll also be looking for information on Apple’s AI rollout. The company has lagged peers like Google — with which it’s partnered to use Gemini — in incorporating AI into its flagship devices. On the bright side, Apple has also spent a lot less than other major tech companies building out AI.