Apple blew past Wall Street expectations in its first earnings report since it announced CEO Tim Cook would be stepping down. The company reported $111.2bn in revenue for the second quarter of 2026, surpassing the anticipated $110bn.
Cook's Victory Lap
Outgoing CEO Tim Cook celebrated what he called the 'best March quarter ever,' highlighting double-digit growth across every geographic segment and extraordinary demand for the iPhone 17 lineup. Cook shared his thoughts on the leadership transition, stating, 'There's no one on this planet I trust more to lead Apple into the future' than incoming CEO John Ternus. When asked by an investor what advice he gave Ternus, Cook replied, 'Never forget the north star for the company. You know, we're about making the best products in the world that really enrich other people's lives.'
Ternus, currently senior vice-president of hardware, spoke briefly, praising Cook's thoughtfulness in financial decision-making and saying, 'This is the most exciting time in my 25-year career at Apple to be building products and services.'
Financial Highlights
Apple crushed Wall Street expectations of $110bn in revenue, racking up $111.2bn. In greater China, revenue reached $20.4bn. Apple also beat expectations of $1.96 in earnings per share, reporting $2.01. Apple's stocks rose in after-hours trading following the release.
Challenges Ahead for Ternus
Apple's announcement on 20 April that Ternus would take over as top executive in September comes at a critical juncture. Apple has not invested as heavily in AI as its biggest competitors, yet it still bears costs from the AI boom. OpenAI, Google, and Microsoft buying up much of the world's memory chip supply has driven up costs for Apple. Cook warned of 'significantly higher' memory costs in the third quarter but noted that the main supply constraint is advanced chip production nodes, not memory chips. Samsung reported a nearly 50-fold increase in memory chip profit on the same day.
Ternus also inherits a complicated privacy legacy. While Cook has fought hard for privacy protections in the US, he has made significant concessions in China, Apple's second-largest and fastest-growing market.
Geographic Growth
Cook expressed excitement about increasing revenue in China, primarily driven by iPhone sales, and sees a 'huge opportunity' in India, the second-biggest phone market where Apple currently holds a 'modest share.'
AI and Product Strategy
Cook described Apple's approach to AI as 'not as a standalone feature' but as an 'essential, intuitive part of the experience across our devices,' citing AirPods' live translation feature and a promise to release a revamped Siri later this year. He also admitted the company 'under-called the level of enthusiasm' for the newly released, budget-focused MacBook Neo.
Ternus, who joined Apple's product design team in 2001, has been instrumental in introducing products like the iPad, AirPods, and many generations of iPhone, Mac, and Apple Watch. He is expected to be in charge by the time Apple launches its first foldable iPhone later this year.
