Apple (AAPL) delivered a blockbuster fiscal fourth quarter, defying macroeconomic headwinds and supply chain constraints to post results that exceeded Wall Street’s expectations. Revenue for the quarter ending September 27th surged 8% year-over-year to $102.47 billion, surpassing the LSEG consensus estimate of $102.26 billion. Earnings per share (EPS) reached $1.85, a staggering 91% increase (or 13% excluding a one-time charge from the previous year), also beating the LSEG estimate of $1.77.
The strong performance, particularly the rosy forecast for the critical holiday quarter, sent Apple shares soaring as much as 5% in after-hours trading, before settling around $278. This surge underscores investor confidence in Apple’s resilience and its ability to navigate a challenging global landscape. The stock has rebounded impressively, gaining approximately 30% in the past three months, recovering from a sluggish start to the year and recently cresting the $4 trillion market capitalization milestone.
Beyond the headline numbers, Apple’s Q4 earnings highlighted several key drivers of its success. The services segment, a key area of focus for Apple, achieved an all-time revenue record across all geographic regions, owing to higher margins, demonstrating the company’s growing ecosystem. CEO Tim Cook noted on the earnings call that the company saw record sales in the Americas, Europe, Japan, and the rest of Asia-Pacific, except Greater China, showing the worldwide demand of Apple products. Furthermore, Apple’s consolidated gross profit margin expanded significantly, thanks to a favorable sales mix, even while absorbing a $1.1 billion tariff-related cost headwind.
While iPhone sales grew a healthy 6% to $49.03 billion, they fell slightly short of analysts’ expectations. Cook attributed this shortfall not to waning demand, but to supply constraints affecting several iPhone 16 and newer iPhone 17 models. This supply-demand imbalance suggests that Apple is sitting on substantial pent-up demand.
Looking ahead, Apple’s guidance for the crucial fiscal first quarter (December quarter) is particularly encouraging. Management projects revenue to significantly exceed expectations, with Cook stating that the December quarter revenue will “be the best ever for the company and the best ever for iPhone.” This optimistic outlook is fueled by strong anticipated demand for the iPhone 17 and continued growth within Apple’s massive installed base of active devices, which reached a new all-time high.
The projected double-digit growth in iPhone revenue signals Apple’s continued dominance in the smartphone market, despite intensifying competition from rivals like Samsung, Xiaomi, OPPO, Dell, and HP Inc. Furthermore, Apple anticipates services revenue to expand at a robust pace, mirroring the growth rate observed throughout fiscal year 2025 (approximately 13.5%).
Gross margin for the December quarter is projected to fall between 47% and 48%, which is beating the Street prediction. Although operating expenses are expected to increase, due to investments in artificial intelligence, including a revamped Siri in 2026, the strong guidance, the underlying trends highlighted in Apple’s Q4 results reinforce the company’s strong competitive position.
Key Takeaways:
- Products: Product revenue reached a September quarter record, driven mainly by growth in iPhones and Macs.
Despite the increase, Product sales didn’t meet expectations. Apple’s active devices grew, reaching a new all-time high.
iPhone sales grew, reaching September quarter records in Latin America, the Middle East, and South Asia, with iPhone sales reaching all-time highs in India. Mac sales were up in all geographic segments, also achieving double-digit growth in emerging markets.
The Apple Watch and AirPods also saw growth, reaching all-time highs. - Services: Services achieved all-time revenue records in advertising, App Store, cloud services, music, payment services, and video. Growth also recorded all-time highs for transacting and paid accounts.
- Outlook: December quarter revenue is expected to increase 10% to 12%. Growth in iPhone revenue is expected to be double-digit year over year. Apple anticipates sales for the Services segment to increase at a higher percentage than the original forecast.
Apple’s capital allocation strategy remains consistent. The company ended the September quarter with a formidable $132 billion in cash and marketable securities. During the quarter, Apple returned a substantial $24 billion to shareholders through dividends and share repurchases.
Given the robust iPhone momentum and management’s commitment to integrating advanced AI capabilities into its ecosystem, we are increasing our price target to $300.
Original article, Author: Tobias. If you wish to reprint this article, please indicate the source:https://aicnbc.com/11944.html
