Apple 1Q26 First Take: Results were solid, with revenue and GPM beating the Street. The upside was driven by the iPhone 17 lineup and a weaker USD.
1) Top-line growth: driven by iPhone 17 demand. iPhone revenue rose 22% YoY this quarter, with China iPhone shipments up 33% YoY.Despite limited innovation, the iPhone 17 performed strongly in China. Benefiting from state subsidies, the 256GB iPhone 17 took share from Android brands in China.
2) GPM expansion: Despite memory price headwinds, hardware GPM improved YoY. Scale from higher iPhone shipments and USD weakness were key drivers. As iPhone and other products target the mid-to-high end, the cost impact from memory hikes is smaller vs. peers, allowing Apple to absorb more of the pressure.
Beyond the quarter, mgmt. guided next quarter revenue up 14-17% YoY to $107.1-110.0bn; GPM at 47.5-48.5%. iPhone will remain the main growth driver.
Despite sharp memory price inflation, the company still guided to solid margins. This underscores its strong supply-chain management.
Apple also announced a leadership transition: Tim Cook will step down as CEO on Sep 1 to become executive chairman, with SVP of Hardware Engineering John Ternus succeeding as CEO. The market broadly expects limited impact on strategy.
Overall, results remained resilient this quarter. Despite sharp memory pricing, GPM still expanded, reflecting product strength and supply-chain discipline.Beyond the current biz., investors are looking for AI breakthroughs to expand the upside narrative. For details, follow Dolphin Research's follow-ups and mgmt. commentary. $Apple(AAPL.US)
