Apple on Thursday reported strong demand for its flagship iPhone 17 and new MacBook Neo, driving an upbeat sales outlook that sent its shares up nearly 4% in after-hours trading.
The company projected revenue growth of 14% to 17% for the current fiscal third quarter, exceeding Wall Street expectations of about 9.5% growth to $102.93 billion, according to LSEG data.
Despite the strong outlook, Apple warned of ongoing chip supply constraints and rising memory costs, which continue to pressure its supply chain. CEO Tim Cook said demand for the iPhone 17 was “off the charts,” but limited flexibility in the supply chain restricted output.
“The demand was off the charts. And there’s just a little less flexibility in the supply chain at the moment for getting more parts,” Cook told Reuters.
In the fiscal second quarter, Apple posted revenue of $111.18 billion and earnings per share of $2.01, both ahead of analyst estimates. iPhone sales reached $56.99 billion, slightly below expectations, largely due to processor chip shortages affecting production.
Cook noted that the iPhone 17’s chips are built using advanced TSMC manufacturing technology, similar to those used in leading AI processors, making supply more constrained than previous cycles.
A key growth driver was the new MacBook Neo, priced at $500 for students, which helped Mac sales reach $8.4 billion, above forecasts. Analysts believe the device could open a new $20 billion low-cost laptop market currently dominated by Chromebooks.
Apple’s services division also performed strongly, generating $30.98 billion in revenue, surpassing estimates and reinforcing its position as a stable earnings pillar amid hardware volatility.
In China, Apple recorded $20.5 billion in sales, beating expectations and highlighting resilient demand in a critical market.
Gross margins came in at 49.27%, higher than estimates, helped by existing chip inventory, though Apple warned margins could decline in the coming quarter due to sharply higher memory chip costs.
“We expect significantly higher memory costs,” Cook said, adding that pressure is expected to persist beyond June.
To reassure investors, Apple also announced a fresh $100 billion share buyback programme, even as it navigates intensifying competition in artificial intelligence and a potential leadership transition.
The company said research and development spending rose 33.5% to $11.42 billion, reflecting increased investment in AI capabilities ahead of its annual developer conference in June.
Apple also indicated a shift in its cash strategy, stepping back from its long-standing goal of reaching a net cash neutral position, a move analysts say could give the company greater financial flexibility.
