Apple stock rallies on Q2 earnings and Q3 guidance
CHENGDU, CHINA – MARCH 18: Apple CEO Tim Cook attends a special event celebrating Apple’s 50th anniversary at the Apple Taikoo Li Chengdu store in Chengdu, Sichuan Province, China, on March 18, 2026.
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Apple Shares rose more than 3% on Friday after the iPhone maker reported better-than-expected quarterly results and revenue forecast for the current period that beat analysts’ estimates.
CEO Tim Cook, who is set to step down in September after 15 years in the role, praised the company’s performance in the face of severe supply constraints largely caused by a global memory shortage.
The company said late Thursday that revenue in its fiscal third quarter ending in June will rise between 14% and 17% from a year earlier, with analysts forecasting growth of 9.5%. Apple is seeing continued demand for a range of Mac models, as well as the iPhone 17 family, which Cook calls “the most popular series in our history.”
In March, Apple launched a lower-cost computer called the MacBook Neo, and customer response was “off the charts due to higher-than-expected demand,” Cook said late Wednesday.
Analysts sought clarity from Cook, who said the company would “look at a range of options” to address rising memory costs, a trend the CEO sees only intensifying. Investors didn’t get much response but remained mostly indifferent.
“This creates some risk, but after last night’s results, we feel much better about Apple’s ability to manage margins than previously expected,” analysts at Morgan Stanley wrote in a note to clients Friday. “This is the biggest source of our predictions leading to higher earnings.”
Analysts who recommend buying the stock raised their earnings per share estimates for the fiscal year to $8.89 from $8.63.
Ahead of the bullish forecast released on the earnings call, Apple reported that revenue and earnings were in good shape for the fiscal second quarter. Revenue rose 17% to $111.18 billion from $95.4 billion a year earlier. Analysts expected sales of $109.66 billion, according to LSEG.
The company beat forecasts for Mac revenue, iPad revenue and services, but fell short on iPhone sales. Apple continued to deliver profit growth by strengthening its services business, which comes with much higher margins than hardware.
Services revenue in the quarter rose nearly 16% to $30.98 billion from $26.65 billion a year earlier. Apple uses its massive customer base and a total of more than 2.5 billion active devices on the market to sell subscriptions to Apple Pay, iCloud and AppleCare services, as well as entertainment services.
Long stuck in the high 30s, Apple’s gross profit margin has risen steadily in recent years, reaching 49.3% in the latest quarter from 48.2% in the previous period. For the June quarter, Apple said gross margin will be between 47.5% and 48.5%.
Analysts at KeyBanc, which has the equivalent of a hold rating on the stock, said Apple’s margin forecast “does not indicate expected memory price contraction.”
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