Apple delivered record quarterly sales and issued a stronger-than-expected outlook for the current period, underscoring the company’s ability to sustain momentum after a blockbuster holiday season driven by iPhone demand. However, rising component costs—particularly memory prices—are emerging as a key challenge that could pressure margins in the months ahead.
During a conference call with analysts on January 29, Apple said revenue in its fiscal second quarter, which runs through March, is expected to rise between 13 per cent and 16 per cent. That forecast comfortably exceeded Wall Street expectations of around 10 per cent growth, signalling resilience even as broader consumer spending remains uneven.
Still, Apple cautioned that higher input costs are becoming more pronounced. Chief executive Tim Cook warned that increasing memory prices, which had only a minimal impact in the previous quarter, are likely to weigh more heavily on gross margins in the current period. “We do continue to see market pricing for memory increasing significantly,” Cook said, adding that the effect would be more visible in the months ahead.
The mixed outlook weighed modestly on Apple shares, which fluctuated in late trading after the earnings release. The stock was up about 1 per cent as of 5.39 pm in New York, though it remains down roughly 5 per cent so far in 2026, compared with a 1.8 per cent gain in the S&P 500 Index.
Apple’s holiday-quarter performance comfortably beat expectations. Total revenue in the fiscal first quarter ended December 27 surged 16 per cent to US$143.8 billion, topping the US$138.4 billion average analyst forecast compiled by Bloomberg. The standout driver was the iPhone, with revenue climbing to US$85.27 billion, far above the US$78.65 billion analysts had projected.
Cook described demand for the new iPhone 17 as exceptionally strong, with sales records set across all geographic regions. Growth in services and a rebound in China also contributed to the outperformance. “The demand for iPhone was simply staggering,” Cook said in an interview with Reuters, noting year-on-year revenue growth of 23 per cent in the category.
However, not all segments performed equally well. Apple reported weakness in its Mac and wearables businesses, while its artificial intelligence strategy continues to face scrutiny ahead of a planned overhaul in 2026. The company is also contending with tariffs, which it previously estimated would create a US$1.4 billion headwind during the holiday period.
Despite the challenges, Apple recently reclaimed its position as the world’s top smartphone seller, overtaking Samsung Electronics. Analysts caution, however, that maintaining that lead will depend on pricing decisions and the success of next-generation products, including wearables and a long-rumoured foldable iPhone.
