Apple earnings recap: Tim Cook delivers a beat across the board, talks rising memory costs

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Cook says he sees a "huge opportunity" for Apple in India, one it's been focused on for a while, as it's the second-largest smartphone market and the third-largest PC market.

"There are a lot of people moving into the middle class there, and we've got some great products for them, both currently and coming," Cook says. "I'm over the moon."

Apple has faced some headwinds in China in recent years, but has since returned to growth in the region. Cook says he's "really happy" with Apple's performance in China and notes that growth is largely driven by the iPhone, which is the top-selling model in urban China. The Mac Mini and MacBook Air are also driving the positive growth in China, he adds.

President Donald Trump has urged companies not to apply for tariff refunds following the SCOTUS decision, and that he'll remember companies that don't.

Cook outlines a plan to apply for tariff refunds but to reinvest any return into US innovation and manufacturing. He notes that Apple's tariff impact was lower in the March quarter than in the December quarter, due in part to lower product volume.

Apple is both advancing its own AI and partnering with AI companies. Although he didn't go into detail about Apple's recently announced partnership with Google, Cook says it's on the right track. He says he's also bullish on the advancements Apple is making independently.

Apple's CFO says that the company's products gross margin did decrease by 200 basis points, sequentially driven by seasonal loss of leverage and higher memory costs."

"If I zoom out, though, I think it's important just to look at what drove the overall company gross margin performance," he adds. (Apple's overall gross margin was up and ahead of estimates.) "That was driven by a favorable mix of lower tariff-related costs, and that was partly offset by seasonal loss of leverage and higher memory costs," the CFO adds.

Cook says the "primary constraint" is the availability of the advanced nodes on which system-on-a-chip is produced.

Apple says it's staying on top of AI advancements and its future road map. Cook says the company is investing more as it accelerates research and development.

"We're clearly investing, we're investing in products and services, and we see opportunities in both of those," Apple says.

Cook fields a question about higher memory costs and their impact on products. He declines to get into the details, but says it will explore a range of options to address the higher costs of memory.

Apple talks about its ads business, says ads in its Apple Maps app will help businesses grow.

"Apple Maps will feature ads during key search and discovery moments, creating a new way for local businesses to reach customers and explore new places," Apple's CFO says.

Apple says the MacBook Neo is supply-constrained, thanks to strong demand. Cook says the company underestimated the level of popularity of the $599 MacBook Neo. He points out that it's been adopted in some public schools over Google's budget Chromebooks.

Cook says Apple is seeing higher memory costs — partially offset by carry-on inventory — and they will only get higher in the June quarter.

"We believe memory costs will drive an increasing impact on our business, and we'll continue to evaluate this," Cook says.

Apple's stock price climbs higher after hours, now up over 4%. The company previously said it "no longer providing net cash neutral as a formal target."

"Our goal of net cash neutral has really served us well," Apple says. "It has been a valuable framework for us, you know, and for our capital structure since in 2018 you know, we believe we're at a stage where we're evaluating cash and debt independently is really the right approach for us and allows us to make more optimal economic decisions around how we best utilize our debt and cash portfolios to support the business, based on business factors and market conditions."

"You know, we don't get into our future road map, and so I don't want to, you know, give too much info there," Cook says.

"But I would just say that we're thrilled with how the iPhone is doing, growing 22% in the quarter, and followed up from an incredible Q1 and having the strongest cycle that we've ever had in our history, from the launch through the March quarter, we could not be happier with it," he adds.

Cook says demand is a factor for the supply constraints for Mac models. It could be "several months" before the Mac Mini — a fan-favorite for users of the OpenClaw AI agent — and the Mac Studio reach supply-and-demand balance. As for the newly launched MacBook Neo, demand is off the charts, according to Cook.

The first question is about supply constraints.

Apple's CFO provides some color on guidance for the coming quarter:

• Revenue to grow 14% to 17%
• Apple says iPad faces a difficult compare driven by the launch of the A16-powered iPad in the prior year.
• Service to grow at year-over-year rate similar to March quarter
• Gross margin expected to be between 47.5% and 48.5%
• Operating expenses between $18.8 billion and $19.1 billion
• Tax rate to be around 17%

Apple says "leading AI developers like Perplexity" are choosing the Mac as their preferred platform to build enterprise-grade AI.

Services set a revenue record at $31 billion. Cook points to Apple TV, with its original shows and partnership with F1.

The CEO reiterates Apple's plans to produce some Mac Minis in the US, starting later this year, out of a Houston factory.

Apple's much-delayed personalized Siri is still on the way — Cook says sometime "this year." (Remember: Apple's WWDC software event kicks off June 8.)

Apple Intelligence is woven into the core of its platforms, Cook says. He adds that Apple devices are the best platforms to experience AI. Still, the more personalized Siri doesn't have a clear release date yet, but it's coming in 2026, he adds.

The Apple Watch is playing an "essential" role in health, Cook says. Cook says the Apple Watch family is delivering on more than just fitness. Its health and science abilities can't be overlooked.

Users are strongly embracing Mac for its AI capabilities, Cook says, calling the lineup the "most advanced" in Apple history. Apple silicon is delivering "exceptional performance, industry-leading efficiency, and the ability to run advanced models locally," he adds.

Cook says the 17 lineup is Apple's most popular in the company's history, "when looking at the launch through the March quarter."

"And according to IDC, we gained market share during the quarter," he adds.

Cook takes a victory lap and shouts out the Artemis mission, where astronauts used the iPhone 17 Pro Max to capture "otherworldly" images.

The iPhone, including the new iPhone 17e, posted $57 billion in revenue despite supply constraints. "This is the most powerful, capable, and versatile iPhone family we've ever created," Cook says.

Shares are down .8% after hours.

We're back to Tim Cook, who is going through prepared remarks. For investors looking for signals about John Ternus' product approach, they'll have to wait.

Ternus gives Cook praise and thanks shareholders for their confidence in Apple. He says he won't get into the details of Apple's road map on this call, but it's an "exciting" time for Apple and his 25-year career at the company.

Cook notes it's his 89th earnings call. He expresses gratitude to the teams at Apple and praises his successor, John Ternus.

"I have been so proud to call him a colleague and a friend, and I will be even more proud to call him Apple's CEO," Cook says.

Expect to hear mostly from current CEO Tim Cook, but newly minted CEO John Ternus will also give brief remarks.

Along with the overall strength of the iPhone 17 lineup, Apple says the $599 iPhone 17e is also seeing demand as a budget option for consumers.

"We were excited to introduce remarkable new products to our strongest lineup ever," Cook says in the press release.

Tim Cook shouts out Apple's cheapest laptop yet, the $599 MacBook Neo, saying that it's "captivating customers all around the world." The Mac category grew to $8.4 billion for the March quarter.

Apple hit an all-time high for its installed user base, or number of active devices, across all major product categories and regions. Cook boasts that it's the company's "strongest lineup ever," including the launch of the budget iPhone 17e, the MacBook Neo, and the M4-powered iPad Air.

Apple's results beat analysts' estimates across the board. But the stock was down around 1.1% after hours shortly after the earnings crossed.

The tech giant reported $111.2 billion in revenue for the March quarter, achieving double-digit growth across all geographic segments. The iPhone 17 lineup is seeing "extraordinary" demand, Cook says in the press release. Services also reached another all-time high.

• Revenue: $111.2 billion vs. $109.6 billion estimate
• EPS: $2.01 vs. $1.96 estimate
• iPhone:: $56.99 billion vs. $56.98 billion estimate
• Services: $30.97 billion vs. $30.37 billion estimate
• Greater China: $20.49 billion vs. $18.91 billion estimate
• Wearables, home and accessories: $7.9 billion vs. $7.72 billion estimate

When Apple announced on April 20 that Cook would step down as CEO, it named senior vice president of hardware engineering, John Ternus, as his successor. Cook called his tenure as CEO "the greatest privilege of my life" in Apple's news release.

Ternus' selection marks the return of a CEO with a hardware background since Steve Jobs. Apple also named executive Johny Srouji as chief hardware officer as part of its transition plan.

As AI companies demand more and more memory chips, consumer electronics companies face a shortage. It's led to price increases on some laptops, and Apple could be susceptible. Cook was asked about the memory shortage last quarter, and he declined to speculate.

In March, the tech giant released the MacBook Neo. It's Apple's cheapest laptop yet, at $599. A MacBook priced under $1,000 positions Apple to compete with rival PC makers. Tech industry insiders have described it as a disruptor to the PC laptop market.

Wedbush analyst Dan Ives previously laid out three things investors will be looking for from John Ternus. He remains optimistic that Apple's earnings won't disappoint investors and shares BofA's sentiment that WWDC will bring positive updates. But like many of his peers, he'll be watching for updates on its new CEO and what his plans are when he officially takes over.

"With Cook leaving as CEO, this will be a monumental conference call for Apple," Ives noted. "Investors will be laser focused on Cook's comments around leaving and breadcrumbs around the much anticipated AI strategy now under Ternus."

BofA has a $325 price target for Apple and predicts a strong earnings beat. The bank notes that it expects strong growth from both iPhone demand and services.

"Upcoming catalysts include expected new buyback authorization, [Worldwide Developers Conference] in June, and launch of a foldable iPhone in the fall & launch of an enhanced Siri with integration with Gemini AI which can drive higher upgrades," BofA analysts wrote.

JPMorgan analyst Samik Chatterjee says the earnings call will center on Ternus and his plans to spur growth. While his team maintains a bullish $325 price target for Apple stock and anticipates strong demand for the iPhone and Mac family, they remain focused on the leadership transition.

"Center stage on the earnings call will be the planned transition of the CEO role to John Ternus on September 1 and the potential implications of the change in Apple's strategy relative to Hardware vs. Services," Chatterjee wrote in a note to investors.

Goldman analyst Michael Ng maintains a bullish $330 Apple stock price target, implying 22% upside potential. His team believes that concerns about Apple are overblown as the company maintains a dominant position in the smartphone market.

The analysts wrote that they expect Apple's EPS to come in at $2, above the Wall Street consensus, and they predict overall outperformance in iPhone and Mac revenue, as well as gross margins.

Second quarter

• Revenue estimate $109.66 billion
• Products revenue estimate $79.26 billion
• IPhone revenue estimate $56.98 billion
• Mac revenue estimate $8.13 billion
• IPad revenue estimate $6.65 billion
• Wearables, home and accessories estimate $7.72 billion
• Services revenue estimate $30.37 billion
• Greater China rev. estimate $18.91 billion
• Americas rev. estimate $45.82 billion
• Europe revenue estimate $29.08 billion
• Japan revenue estimate $7.38 billion
• Rest of Asia Pacific revenue estimate $8.76 billion
• EPS estimate $1.96
• Total operating expenses estimate $18.47 billion
• Research and development operating expenses estimate $11
  billion
• SG&A operating expense estimate $7.46 billion
• Gross margin estimate $53.2 billion
• Cash and cash equivalents estimate $48.96 billion
• Cost of sales estimate $56.58 billion
• Total current assets estimate $154.18 billion
• Total current liabilities estimate $154.03 billion
  
  Third quarter
• Capital expenditure estimate $3.48 billion
• Operating expense estimate $18.15 billion

Source: Bloomberg data