CEO Tim Cook cites chip supply issues impacting iPhone sales as company announces major buyback plan.
Category: Business
Apple Inc. (NASDAQ:AAPL) announced its second-quarter earnings for the fiscal year 2026, reporting a record revenue of $111.18 billion for the period ending March 31, marking a 17% increase compared to the same quarter last year. This figure exceeded the market expectation of $109.66 billion, as surveyed by financial data provider LSEG.
The company’s earnings per share (EPS) also surpassed forecasts, coming in at $2.01, which is a 22% increase from the previous year and higher than the anticipated $1.95. Apple’s gross margin stood at 49.3%, exceeding the expected 48.4%. The iPhone segment alone generated $56.99 billion in revenue, representing a 22% increase year-over-year, but still fell short of analyst expectations of $57.21 billion.
Following the announcement, Apple’s stock initially rose by 0.44% during regular trading hours but experienced a reversal in after-hours trading, dropping by approximately 1%. Analysts noted that the shortfall in iPhone sales was attributed to persistent chip supply shortages affecting production capabilities.
CEO Tim Cook acknowledged the challenges, stating, "Demand for the iPhone was incredibly high, but the flexibility of our supply chain has been impacted due to unstable chip supplies." He emphasized that these supply constraints limited the company’s ability to fulfill the high demand for its flagship product.
In terms of regional performance, Apple reported that its revenue from the Greater China region reached $20.49 billion, marking a 28% increase year-over-year. This growth rate has slowed compared to the previous quarter's 38%. Other product categories also showed strong performance, with the services segment generating $30.98 billion, a 16% increase, and exceeding expectations of $30.39 billion. The iPad and Mac segments contributed $6.91 billion and $8.4 billion, respectively.
Apple’s success in diversifying its revenue streams is evident, but the company remains cautious about future growth due to potential supply chain disruptions. For the upcoming quarter, Apple expects revenue growth rates to remain around 17% with gross margins projected to be in the mid-48% range.
As the tech giant navigates these challenges, it has also approved a substantial stock buyback plan, authorizing up to $100 billion in additional share repurchases. Alongside an increased dividend of $0.27 per share, this move reflects Apple’s confidence in its long-term growth prospects, even as it grapples with immediate supply chain issues.
Looking ahead, Apple is set to release new products, including the iPhone 17 and a budget-friendly MacBook, which could help bolster sales in the coming months. The company is also working closely with its chip suppliers, including Taiwan Semiconductor Manufacturing Company (TSMC), to mitigate supply chain risks and meet consumer demand.