Apple blew past Wall Street expectations in its first earnings report since it announced CEO Tim Cook would be stepping down. The company reported $111.2bn in revenue for the second quarter of 2026, surpassing the $110bn forecast, and earnings per share of $2.01, above the predicted $1.96.
Cook's Victory Lap
Outgoing CEO Tim Cook called it the 'best March quarter ever,' noting double-digit growth across every geographic segment and extraordinary demand for the iPhone 17 lineup. In greater China, revenue reached $20.4bn. Cook shared his thoughts on the leadership transition, stating, 'There's no one on this planet I trust more to lead Apple into the future' than incoming CEO John Ternus. He advised Ternus to 'never forget the north star for the company: making the best products in the world that enrich people's lives.'
Ternus Takes the Helm
John Ternus, currently senior vice president of hardware, spoke briefly, praising Cook's financial decision-making and calling this 'the most exciting time in my 25-year career at Apple to be building products and services.' Ternus joined Apple's product design team in 2001 and has been instrumental in launching the iPad, AirPods, and multiple generations of iPhone, Mac, and Apple Watch. He is expected to take over as CEO in September, just before the launch of Apple's first foldable iPhone.
Challenges Ahead
Apple faces headwinds including rising memory chip costs due to AI demand from competitors like OpenAI, Google, and Microsoft. Cook warned of 'significantly higher' memory costs in the third quarter but noted that the main supply constraint is advanced chip manufacturing nodes, not memory. Samsung reported a nearly 50-fold increase in memory chip profit on the same day.
Privacy and Growth Markets
Ternus inherits a complex privacy legacy. While Cook championed protections in the US, he made concessions in China, Apple's second-largest and fastest-growing market. Cook expressed excitement about increasing revenue in China, driven by iPhone sales, and sees a 'huge opportunity' in India, the second-biggest phone market where Apple has a 'modest share.'
AI and Product Strategy
Cook emphasized that Apple approaches AI 'not as a standalone feature' but as an 'essential, intuitive part of the experience across our devices,' citing AirPods' live translation and a revamped Siri later this year. He admitted the company 'under-called the level of enthusiasm' for the budget-focused MacBook Neo. Apple's stock rose in after-hours trading following the earnings release.
