Apple Q1 2026: Record revenue driven by iPhone and Services segments

Apple delivered consistent results for the first quarter of 2026. As market capitalisation fluctuates near the US$4 trillion threshold, the company’s performance remains supported by a growing global product ecosystem and subsequent record-high Services revenue.

Revenue hit an all-time high of US$143.8 billion in Q1 2026, fuelled by record iPhone and Services performance and double-digit growth in most markets. While memory prices had a minimal impact, tariffs resulted in a US$1.4 billion headwind during the quarter. Nevertheless, overall gross margin improved to 48.2% (up from 47.2% in Q4 2024 and 46.9% in Q1 2025), driven by a favourable product mix and operating leverage. Gross margins typically benefit from increased leverage and optimised cost structures in the first quarter, reflecting the products launched in the preceding quarters.

Products revenue grew 16.1% year-on-year, led primarily by the iPhone. Apple’s global ecosystem reached a milestone of 2.5 billion active devices. Efficiency gains were achieved, with Products gross margins rose sequentially from 36.2% to 40.7% in Q1 2026 (39.3% in Q1 2025).

Services revenue rose 13.9% year-on-year, seeing double-digit expansion across both developed and emerging markets. Apple reached all-time revenue records for Cloud, Music, advertising, and payments, while the App Store and video set new December quarter records. Services profitability remains good, with margins expanding sequentially from 75.3% to 76.5% Q1 2026 (75.0% in Q1 2025).

In Q1 2026, Apple was in a net cash position of US$54 billion. During the quarter, the company distributed US$3.9 billion as dividends to shareholders and spent US$25 billion buying back 93 million shares from the open market. The company also announced a cash dividend of US$0.26 per share.

Apple is executing its US$600 billion, four-year U.S. investment strategy by onshoring critical supply chain components and scaling AI infrastructure—most notably through American-made servers now shipping from its new Houston facility.

Under the existing global tariff and policy climate, management expects 13%–16% year-on-year revenue growth, with gross margins between 48% and 49%. While Services growth is expected to remain steady, management warned of elevated operating expenses due to continued R&D and potential headwinds from rising memory prices particularly later in the year amid supply constraints.

Products

In Q1 2026:

• Revenue from iPhone increased 23.3% year-on-year to US$85.3 billion, driven by the iPhone 17 lineup.
• Mac revenue decreased 6.7% year-on-year to US$8.4 billion, given a tough comparison against launches of M4 MacBook Pro, Mac Mini, and iMac in the preceding quarter.
• iPad revenue increased 6.3% year-on-year to US$8.6 billion, driven by M5-powered iPad Pro and the A16-powered iPad.
• Revenue from Wearables, home, and accessories declined 2.2% year-on-year to US$11.5 billion, impacted by supply constraints notably on AirPods Pro 3.

According to 451 Research, customer satisfaction level remained high across Apple products. The number of upgraders reached record highs across iPhone and iPad. According to CEO Tim Cook, iPad continues to dominate the global tablet market by maintaining its leadership position. About half of the customers who purchased iPhone, Mac, iPad, and Apple Watch during the quarter were new to the products. Health features such as hypertension detection are being used as “entry hooks” to bring health-conscious users into the Apple ecosystem through Apple Watch for the first time.

iPhone revenue achieved all-time records in most markets. As a result, inventory level remained lean due to high demand. iPhone was the top-selling model across the US, urban China, the UK, Australia, and Japan according to World Panel. Notably, its market share increased in December.

Despite registering lower year-on-year quarterly revenue, Mac revenue grew across several emerging markets including Brazil, India, Malaysia, and Vietnam and recorded higher market share in 2025. According to Cook, MacBook Air is the leading individual laptop model purchased by consumers and increasingly by businesses.

Apple Intelligence is currently available in 15 languages, and the company has continued to expand the platform’s capabilities with new features such as live translation for AirPods Pro 3. Management confirmed a collaboration with Google to support future Apple foundation models and intelligence features. A more personalised and integrated version of Siri is currently in development, designed to utilise a hybrid architecture of on-device processing and private cloud compute. Cook views both on-device and private cloud compute as equally important components of Apple’s long-term artificial intelligence strategy.

Services 

• The number of paid subscribers grew by double digits, while both transacting and paid accounts reached all-time highs.
• The viewership of Apple TV increased 36% year-on-year in December 2025. This growth was supported by expanded intellectual property, including new Apple Original series and sports offerings.
• Both listenership and new subscriber growth on Apple Music climbed to all-time highs during the quarter.
• Apple Pay has been expanded into more markets and assisted partners in preventing more than US$1 billion in fraudulent transactions during 2025.
• Apple Creator Studio is a recently launched subscription suite across Mac, iPad, and iPhone to provide a consistent video and creative production experience.
• App Store averaged over 850 million weekly visitors in 2025. Since its launch in 2008, the platform has generated more than US$550 billion in earnings for developers. Additionally, Apple is expanding its App Store advertising inventory by introducing new search results placements, providing developers with more opportunities to reach users during the discovery process.
• Apple opened its fifth retail store in India in December 2025 and is planning to open a second store in Mumbai in the coming months.

Key analyst questions

Apple uses a mix of internal data centres and third-party cloud providers. This hybrid strategy allows the company to scale AI capacity quickly without over-committing to permanent fixed costs. Management noted that capital expenditure will remain volatile quarter-to-quarter. Fluctuations are driven by the timing of tooling, retail expansions, and data centre build-outs, rather than changes in consumer demand. In Q1 2026, capital expenditures included significant investment in private cloud compute.

Apple is currently in a ‘supply chase’ for the iPhone 17 due to higher-than-expected demand. The primary bottleneck is the limited manufacturing capacity for 3-nanometer chips. This constraint is expected to impact supply throughout the March quarter. The 3nm chip supply is the “gating” factor (hindrance) for total revenue growth in Q2.

During the quarter, revenue from Greater China grew 37.9% year-on-year in Q1 2026, primarily driven by iPhone.

• According to World Panel, iPhones occupied one of the top three smartphones spots while the iPad was the leading tablet model in urban China.
• According to Counterpoint, MacBook Air and Mac Mini (in December) were the best-selling laptop and desktop models in the region respectively.
• The installed base of active devices and the number of customers upgrading reached all-time highs.
• Store traffic and the number of customers switching to Apple products grew by double digits.

India is the second-largest smartphone and fourth-largest computer market in the world. While Apple currently holds a modest market share, it continues to view India as a key long-term growth engine as the company’s installed base in the country grew by double digits this quarter.

The fifth perspective

While the global product ecosystem shows signs of maturity, Apple continues to generate growth through high levels of customer retention and expansion in emerging markets. The Services segment remains a primary driver of financial performance, characterised by recurring revenue and high margins. Moving forward, the integration of on-device AI and the continued growth of the installed base are expected to support the company’s long-term revenue trajectory.