Apple CEO Tim Cook holds up the new iPhone 17 Pro during a special Apple event held at Apple’s headquarters in Cupertino, California, on September 9, 2025.
Justin Sullivan | Getty Images
apple announced better-than-expected earnings forecasts for the current period, after beating second-quarter sales and profits. Shares rose about 3% in extended trading.
It’s the second time in three quarters that iPhone sales have fallen short of expectations, and the only significant number that fell short of expectations in Thursday’s report.
According to LSEG consensus, the company’s performance compared to analyst expectations is:
EPS: $2.01 vs. 1.95 Revenue: $111.18 billion vs. $109.66 billion
Wall Street is also keeping an eye on the following key areas:
iPhone revenue: $56.99 billion vs. $57.21 billion expected Mac revenue: $8.4 billion vs. $8.02 billion expected iPad revenue: $6.91 billion vs. $6.66 billion expected Wearables, Home and Accessories revenue: $7.9 billion vs. $7.7 billion expected services revenue: Expected gross profit of $30.98 billion vs. $30.39 billion: 49.3% vs. 48.4% expected
Apple said its revenue was up 17% from $95.4 billion in the same period last year. It’s the company’s first stand-off with Wall Street since last week’s announcement that Tim Cook would step down as CEO after 15 years.
Apple said in its earnings conference that June quarter sales will increase 14% to 17% compared to the same period last year. Analysts had expected sales to rise 9.5% to $103 billion, according to LSEG.
The company’s board approved an additional $100 billion in share buybacks and declared a cash dividend of 27 cents per share, an increase of 4%.
iPhone sales increased 22% in the quarter compared to the same period last year. Like other consumer electronics and device manufacturers, Apple faces supply chain constraints. The main cause is a global memory shortage due to the surge in demand for artificial intelligence. meta and microsoft said Wednesday that rising memory prices contributed to its forecast for an increase in capital spending this year.
Cook said on the earnings call that the iPhone 17 is now “the most popular lineup in our history,” and noted that overall revenue exceeded expectations “despite supply constraints.” CFO Kevan Parekh said the company is facing supply constraints for iPhones and Macs.
Along with his strong earnings outlook, Cook made it clear to investors that the memory deficit is not going away. He said the impact in the December quarter was “minimal” and that the March quarter was a little harder.
“We expect memory costs to rise significantly” this quarter, Cook said. Additionally, “we believe the impact of memory costs on our business will increase,” so the company will “consider various options,” he said.
In March, Apple announced a number of new products, including the iPhone 17e, a refreshed iPad Air laptop with an M4 chip in 11-inch and 13-inch sizes. The company also announced the MacBook Neo, a low-cost $599 laptop aimed at students and budget-conscious consumers.
Device sales will always be key to Apple’s performance, but what Wall Street is most interested in is what to expect from incoming CEO John Ternus. Apple announced on April 20 that Mr. Tarnas will succeed Mr. Cook, who will become executive chairman on September 1.
Ternus, a longtime Apple executive who has run hardware, attended the conference and was introduced by Cook.
“We have the right leader to step into that role,” Cook said in his opening remarks, adding that Apple has the team to deliver on “the promise of this company.”
Tarnas thanked Cook and Apple’s shareholders and said the company has an “incredible roadmap going forward.”
“You’re not going to get me into the specifics of that roadmap, but let me tell you this: This is the most exciting time in my 25-year career at Apple to build products and services,” Ternas said.
Partnership with Google
One of the first things Ternus needs to figure out is where Apple is going with AI. Earlier this quarter, Apple announced that it would partner with Google to use Gemini AI models to power its Siri product.
During a Q&A session at the company’s earnings conference, Cook said, “Our collaboration with Google is progressing smoothly,” and that the company is “satisfied with where things stand, and we’re satisfied with the work we’re doing independently.”
Services revenue for the quarter increased about 16% from $26.65 billion in the year-ago period. Apple leverages its massive customer base and more than 2.5 billion active devices in the marketplace to sell entertainment services and subscriptions to Apple Pay, iCloud, and AppleCare services.
As services grow, Apple generates higher profit margins. Apple’s gross profit margin has long been stuck in the low 30s, but has been steadily rising in recent years, reaching 49.3% in the latest quarter, up from 48.2% in the previous quarter.
Sales in Greater China for the quarter rose to $20.5 billion, an increase of 28% from $16 billion in the same period last year. The China region is Apple’s third largest after the Americas and Europe.
Research and development expenses grew much faster than revenue, increasing 33% to $11.42 billion in the quarter from $8.55 billion in the year-ago period.
Regarding research and development numbers, Cook said the company is “obviously making additional investments” as it sees growth potential in AI.
“We’re investing in products and services, and we see opportunities in both,” he said.
Parekh went on to say that the company believes that “AI is a very important area of investment for Apple, and we intend to address it incrementally in addition to the investments we normally make in our product roadmap.”
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