---
title: "iPhone Rocks, with Gemini Teamup — Is Apple’s AI Era Finally Coming?"
description: "Apple (AAPL) released FY26 Q1 results after-hours on the morning of Jan 31, 2026 Beijing time (quarter ended Dec 2025). Highlights below: 1) Overall results: revenue of $143.8bn (+15.7% YoY), beating "
type: "topic"
locale: "en"
url: "https://longbridge.com/en/topics/38257779.md"
published_at: "2026-01-30T01:12:52.000Z"
author: "[Dolphin Research](https://longbridge.com/en/news/dolphin.md)"
---

# iPhone Rocks, with Gemini Teamup — Is Apple’s AI Era Finally Coming?

Apple (AAPL.O) released its Q1 FY2026 results (quarter ended Dec 2025) post-market on Jan 31 Beijing time. Key takeaways:

**1) Headline results: revenue of $143.8bn (+15.7% YoY),** beating the Street ($138.3bn).Growth was driven mainly by iPhone and Services.

**GPM was 48.2%, up 130bps YoY,** ahead of consensus (47.5%). **Services GPM rose to 76.5% YoY,** **while Hardware GPM improved to 40.7%.** The margin uplift reflected lower China-related tariffs and USD weakness.

\[Per U.S.-China negotiations: the U.S. has halved 'fentanyl tariff' on China-made goods from 20% to 10% since Nov.10, 2025\]

**2) iPhone:**$Apple(AAPL.US) **iPhone revenue was $85.3bn (+23.3% YoY), well above consensus ($78.2bn).**Growth was aided by the iPhone 17 lineup and a weaker USD. **Dolphin Research estimates unit shipments up ~5.7% YoY and ASP up ~16.7% YoY.**

**3) Hardware ex-iPhone: iPad revenue rose 6.3% YoY,** supported by M5 Pro and A16 models. **Mac and other hardware declined,** with Mac facing a tough comp from last year's M4 cycle and demand for other hardware still soft.

**4) Services: revenue reached $30.0bn,** in line with consensus ($30.0bn). With a 76.5% GPM, Services generated 33% of total GP on a 21% revenue mix.

**5) Revenue by region: the Americas remained the core base, still above 40% of mix and up 11.2% YoY,** while **Greater China was the best-performing region this quarter.**

Under the 'spec bump at same price' strategy, the iPhone 17 256GB qualifies for state subsidies in Mainland China, **lifting iPhone units in the region by ~20% YoY.**

**Dolphin Research view: re-acceleration, AI remains the focus.**

Results topped on revenue and margin, **driven by the iPhone 17 cycle and a weaker USD.**

**1) Top-line growth:** primarily from the iPhone 17 series.iPhone grew 23% this quarter; despite limited innovation, the 'spec bump at same price' strategy worked well. In particular, the iPhone 17 256GB qualifying for state subsidies boosted Mainland China units sharply.

**2) Margin expansion:** despite memory price headwinds, **Hardware GPM rose again on lower China-related tariffs and USD depreciation, with China tariffs cut from 20% to 10% this quarter.** (Following U.S.-China talks, exports of China-produced goods benefited from the lower rate)

**Beyond the quarter, management guided next quarter revenue growth of 13–16% YoY ($107.8–110.6bn),** with GPM at 48–49% and iPhone as the key driver. While memory inflation will weigh more on margins next quarter, the guide still implies steady-to-better levels.

Beyond this print, the market is also focused on:

**a) Apple–Google Gemini partnership**: on Jan 12, Apple and Google announced a multi‑year deep collaboration. The next-gen Apple foundation model will be built on Google's Gemini models and cloud, powering future AI features, including a more personalized Siri slated for this year.

Specifically, **Gemini will provide trillion-parameter models and technical support, with compute handled on-device and via Apple's private cloud.**  
As to why Gemini: **Apple and Google already have a >$20bn annual search deal, and Gemini's share has been rising, now above 20%.**

**b) New product performance**: iPhone remains the hardware core, and this quarter's growth was driven by last fall's launches. While innovation was modest, **the 'spec bump at same price' strategy delivered a clear payoff.**

The iPhone 17 series standardized 256GB as the base, while keeping the RMB 5,999 price point that meets state subsidy criteria. **This helped Mainland China iPhone shipments rise nearly 20% YoY, far outpacing the broader smartphone market (-0.8% YoY).**

**c) Siri upgrades**: expectations have risen post the Gemini tie-up.

The **Gemini-powered Siri could appear as early as mid-to-late Feb in iOS 26.4 beta, with a general release planned for Mar–Apr,** running on Apple's private cloud with ~1.2tn parameters. Powered by Gemini, **new core capabilities may include multimodal text/image/voice interaction, a 128K-token context window, real-time screen parsing, and cross‑app complex task execution.**

All in, near-term results are still driven by the legacy franchise (notably iPhone). But the market is watching Apple's AI progress more closely, with the coming Siri upgrade especially important.

**Apple's current mkt cap is $3.79tn, implying ~30x PE on FY2026 net income** (assumes +12% revenue growth, 48.3% GPM, and a 17.5% tax rate). Historically, the PE range is 25x–40x, placing the stock slightly below the midpoint.

Two lenses for Apple: **1) Near term,** the recovery is led by the strong iPhone 17 cycle. The next-gen devices are expected to debut 2nm chips, which could support demand and keep trends resilient. **2) Medium to long term,** Apple already has a massive hardware base, and **breakthroughs in AI/Siri can unlock further growth optionality.**

**Overall, this print underscored Apple's market clout.** The iPhone 17 'spec bump at same price' effectively acts as a margin-sharing upgrade. **Put simply, when Apple 'shares economics,' growth snaps back to double digits.**

**The core franchise remains solid, supporting a premium PE even at lower growth.** With a vast global installed base, AI/Siri is the key upside option. Leveraging Gemini's 'brain' raises expectations for Siri iterations, potentially opening more growth runway.

Weak after-hour trading reflected market concerns over memory price hikes, which could drag down on Apple's gross margins.

But one important reminder: **Gemini-powered Siri could appear as early as mid-to-late Feb in iOS 26.4 beta, with a general release planned for Mar–Apr,**

**While memory drag on apple's margin is more likely to become visible after mid-year. Right now a stronger AI Apple weigh much more than a margin erosion by memory chip inflation.**

Dolphin Research's detailed read of Apple's results follows:

**I. Apple's core franchise remains resilient**

**1.1 Revenue: Q1 FY2026 (4Q25) revenue was $143.8bn, +15.7% YoY,** beating the Street ($138.3bn). **Growth was led by iPhone, iPad, and Services,** while Mac and wearables/other hardware declined.

By hardware vs. software:

**1) Hardware grew 16.1% YoY,** driven by iPhone and iPad, with iPhone up 23% and Mac/wearables down. **2) Software grew 13.9% YoY,** holding double‑digit momentum; the Google lawsuit resolution reduced risk, and the Gemini collaboration lifted expectations.

**By region,** **all major regions grew YoY.** The Americas, Europe, and Greater China are the three largest contributors. **The Americas stayed above a 40% mix and grew 11.2% YoY,** Europe rose 12.7%, and **Greater China led at +38%.** With the 'spec bump at same price' policy, the iPhone 17 256GB qualifies for state subsidies, driving a ~20% YoY unit increase in Mainland China.

**1.2 Margins: Q1 FY2026 (4Q25) GPM was 48.2%, up 130bps YoY,** ahead of consensus (47.5%). The uplift came from both higher Hardware and Services margins.

Dolphin Research's split of margins:

**Services GPM stayed high at 76.5%,** while **Hardware GPM improved to 40.7%,** mainly on tariff changes and USD depreciation.

**Per U.S.-China talks: the U.S. plans to halve the 'fentanyl tariff' on China-produced goods to 10% from 20%.**

**1.3 OP: Q1 FY2026 (4Q25) operating profit was $50.9bn, +18.7% YoY.** Growth reflected both revenue expansion and margin gains.

**Opex ratio was 12.8%, up 40bps YoY.** SG&A stayed stable, while R&D has increased over the past two quarters.

**Capex was $2.4bn, down 19% YoY.** Despite Big Tech stepping up AI spend, Apple's capex remains relatively low, with portions of AI and innovation spend booked in R&D, which has grown at double digits recently.

**II. iPhone: 'spec bump at same price' is working**

**Q1 FY2026 (4Q25) iPhone revenue was $85.3bn, +23% YoY,** ahead of consensus ($78.2bn). The iPhone 17 cycle and a weaker USD supported growth.

Dolphin Research breaks down volume and price drivers:

**1) Units:** per IDC, global smartphones grew 1.4% YoY in 4Q25. **Apple's global units rose ~5.7% YoY, outperforming the market.**

**Growth came from the iPhone 17 cycle and Mainland China,** where state subsidies on the iPhone 17 256GB helped drive ~20% YoY unit growth (vs. China market at -0.8% YoY). This was the standout regional performance.

**2) ASP:** based on revenue and units, **iPhone ASP was roughly $1,049, +16.7% YoY.** With the iPhone 17 refresh and USD weakness, ex‑U.S. revenue and pricing benefited from FX translation.

**III. Hardware ex-iPhone: iPad rebounded; others down**

**3.1 Mac**

**Q1 FY2026 (4Q25) Mac revenue was $8.4bn, -6.7% YoY,** missing consensus ($9.1bn), mainly on a tough comp from last year's M4 strength.

Per IDC, **the global PC market grew 11% YoY, while Apple's PC units rose 4.4% YoY,** underperforming the market. **Dolphin Research estimates Mac ASP at ~$1,181, down 10% YoY.**

**3.2 iPad**

**Q1 FY2026 (4Q25) iPad revenue was $8.6bn, +6.3% YoY,** slightly above consensus ($8.2bn), supported by M5 Pro and A16 models.

**3.3 Wearables and other hardware**

**Q1 FY2026 (4Q25) revenue was $11.5bn, -2.2% YoY,** missing consensus ($12.1bn) and remaining soft this quarter.

Management cited AirPods Pro 3 supply chain issues, but AirPods are only part of the segment. The continued decline still points to weak downstream demand.

**IV. Services: steady gains, new AI catalysts**

**Q1 FY2026 (4Q25) Services revenue was $30.0bn, +13% YoY,** in line with consensus ($30.0bn). Even with U.S. App Store allowing external links, Services maintained double‑digit growth, underscoring ecosystem moats.

Services GPM rose to 76.5%, marking five straight quarters above 75%. **At a 21% revenue mix, Services contributed 33% of total GP.**

Apple's AI strategy remains '**privacy-first and ecosystem-integrated**': 1) launch Apple Intelligence with dozens of features such as visual intelligence and real‑time translation, supporting 15 languages with high active adoption; 2) leverage Apple Silicon (e.g., M5) to build a leading **AI hardware platform**; **3) partner with Google** to co‑develop the next-gen Apple Foundation model enabling more personalized AI features in 2026.

**The Google lawsuit resolution reduced Services risk, and Apple's purchase of Gemini services deepens collaboration.** Gemini will supply trillion‑parameter models and tech support, while compute remains on‑device and in Apple's private cloud, increasing expectations for Siri iterations. If the next-gen Siri delivers, Services could see additional growth optionality.

**Dolphin Research read-throughs on Apple:**

Oct 31, 2025 call recap '[Apple (Trans): stepping up AI investment, new Siri next year](https://longportapp.cn/zh-CN/topics/35831673)'

Oct 31, 2025 earnings take '[Apple: iPhone holds the center stage, when will AI show up?](%E8%8B%B9%E6%9E%9C%EF%BC%9AiPhone%20%E7%A8%B3%E4%BD%8F%20C%20%E4%BD%8D%EF%BC%8CAI%20%E4%BD%95%E6%97%B6%E9%9C%B2%E7%9C%9F%E5%AE%B9%EF%BC%9F)'

Sep 10, 2025 event take '[Apple: minor iPhone tweaks to hold the line, major AI still incubating?](https://longportapp.cn/zh-CN/topics/33825264)'

Aug 1, 2025 call recap '[Apple (Trans): capex growth mainly AI-related](https://longportapp.cn/zh-CN/topics/32493092)'

Aug 1, 2025 earnings take '[Apple: AI slow to ship, iPhone to the rescue](https://longportapp.cn/zh-CN/topics/32486459)'

Risk disclosure and statement: [Dolphin Research disclaimer and general disclosure](https://support.longbridge.global/topics/misc/dolphin-disclaimer)

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> **Disclaimer**: This article is for reference only and does not constitute any investment advice.
