Apple reported fourth-quarter revenue of $114.5 billion for the fiscal year 2026, a 12% year-over-year increase that exceeded analysts' expectation of $113.4 billion. Earnings per share (EPS) were $2.10 versus the anticipated $1.99, and net income rose 12% to $30.7 billion.
What drove the growth
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iPhone sales were the primary contributor: revenue from iPhones rose 17% to $57.6 billion, accounting for more than half of Apple’s total revenue. iPhone sales showed double-digit growth in both the United States and China despite supply-chain constraints that limited shipments.
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Mac revenue grew strongly as well, up nearly 24% to $10.8 billion, which Apple attributed to demand for new models and notable strength in emerging markets. The company said the number of customers buying their first Mac reached a record in the quarter.
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iPad revenue declined 10% to $6.2 billion, affected by supply shortages and a tough year-ago comparison following prior product introductions.
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The wearables, Home and Accessories category (including Apple Watch and AirPods) fell 8% to $8.3 billion.
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Services reached a new high, with revenue up 10% to $31.6 billion; Apple highlighted cloud services, video content, payments, and advertising. Services achieved a gross margin of 76%, compared with a 37.2% margin for hardware.
Apple said it now has more than 2.5 billion active devices globally, an important base for recurring services revenue.
Geographic performance
- Americas revenue rose 10% to $48.7 billion.
- Europe revenue grew nearly 12% to $32.0 billion.
- China revenue increased 21% to $17.5 billion, but this missed analysts’ forecast of $18.75 billion.
- Japan revenue declined 1.4%.
Full fiscal year and cash flow
For the full 2026 fiscal year, Apple’s revenue rose 15% to $478.8 billion, net income exceeded $132 billion, and EPS increased 20% to $8.98. Operating cash flow for the quarter ended in September was $28.1 billion, and the company returned about $28 billion to shareholders through buybacks and dividends.
Outlook and guidance
Apple expects revenue for the next quarter to rise 7–10% year over year, which would be slower than the current quarter’s 12% growth but could still make the holiday quarter one of the company's strongest. Management expects services revenue to grow more modestly, in the 8–9% range, citing foreign-exchange headwinds and unfavorable effects from licensing arrangements with external partners.
Headwinds: memory prices and AI-related costs
Investors reacted cautiously after Apple warned that gross margin could decline from the current 47.9% to about 45–46% next quarter. The company cited significant increases in memory-chip prices and higher spending tied to artificial-intelligence development as primary drivers of margin pressure.
Apple also noted that the current 47.9% margin was boosted by one-time items: refunds of previously paid tariffs increased gross margin by roughly one percentage point and added five cents to EPS.
John Ternus described the spike in memory-chip prices as "unprecedented" on the conference call. While Apple has offset some cost increases by raising prices on certain Mac, iPad and iPhone models, management expects memory costs to remain elevated after the December quarter.
At the same time, AI investments are consuming growing resources: research and development expenses rose 32% to $11.7 billion in the quarter, and total operating expenses increased 21% to $19.2 billion. Management projects operating expenses of $20.4–$20.8 billion for the next quarter. The chief financial officer also warned that a broader rollout of the new AI-enhanced Siri will incur additional cloud-service costs, further weighing on profitability.
Market reaction
Following the report, Apple shares fell about 2.6–3% in after-hours trading. Despite the strong revenue and record services results, greater cost pressures and margin risks tempered investor enthusiasm. Apple reiterated that the holiday quarter could still be among its strongest, even if margins and services growth moderate.
This article does not constitute investment advice or a recommendation.
