Apple has reported a massive quarter, achieving record-breaking results driven by a surge in iPhone sales and a surprising recovery in the Chinese market. The company’s total revenue reached $143.8 billion, a 16% increase year-over-year, marking its fastest growth since 2021.
Earnings Per Share (EPS) hit $2.84, up 19% and comfortably surpassing Wall Street’s estimate of $2.68, according to a Bloomberg report. iPhone revenue alone totalled $85.3 billion (a 23% rise), fueled by the highly successful launch of the iPhone 17 and iPhone 17 Pro. Meanwhile, Services revenue set a new record at $30 billion, up 14%. Apple now supports a staggering 2.5 billion active devices worldwide.
In a significant strategic move, Apple also confirmed a partnership with Google to enhance Siri’s personalisation and foundational AI models.
Addressing the Critics
This report goes beyond standard financial disclosures; it directly addresses two major concerns that shadowed Apple throughout 2025:
- The “China Problem”: While critics suggested Apple was losing ground to local brands like Huawei, a 38% revenue surge in Greater China ($25.5 billion) effectively silences those concerns.
- The “AI Gap”: Investors worried Apple was falling behind in the AI race. By reporting record hardware numbers before rolling out major AI features, Apple has demonstrated the sheer strength of its core business.
These results cover the critical October-to-December window, encompassing the iPhone 17 launch and the holiday shopping season. Entering 2026, Apple’s stock had dipped 10% since December; Tim Cook used this strong quarter to restore investor confidence ahead of the next phase of AI integration.
Business Impact
- Supply Chain Challenges: Demand for the iPhone 17 surpassed expectations, forcing Apple into “supply chase mode” for advanced 3-nanometer chips.
- Margin Pressures: While current profit margins are robust at 48.2%, Apple cautioned that rising memory (RAM) costs might reduce profits in the upcoming quarter (Q2 2026).
- Market Position: Apple briefly reached a $4 trillion market value in late 2025. This report secures its standing as a top-tier global leader alongside Nvidia and Microsoft.
Key Business Lessons
- Focus on Quality, Not Trends: While competitors focused heavily on advanced AI in 2025, Apple prioritised pricing discipline and hardware reliability. The lesson is clear: you don’t need to be first with a new technology if you execute your core products flawlessly. Apple sold high-priced, high-margin items while others spent billions on AI without immediate returns.
- Build an Ecosystem, Not a Product: With 2.5 billion devices in use, Apple has built an incredibly loyal customer base. Even as Mac and wearables sales fluctuated, the Services division provided a $30 billion safety net. Building an ecosystem—not just a single product—is crucial. It is far more cost-effective to generate recurring revenue from existing customers than to constantly acquire new ones.
- Partner Instead of Chasing: Instead of rushing to build a proprietary search engine or LLM from scratch, Apple chose to partner with Google. Knowing when to build and when to partner is a vital business skill. By leveraging a partner’s technology while maintaining its own privacy standards, Apple met customer needs efficiently without the risks of trying to catch up on its own.
