Apple Inc. reported record quarterly revenue of US$111.2 billion for the second quarter, beating Wall Street expectations, as outgoing Chief Executive Tim Cook handed his successor a company firing on all cylinders.

iPhone revenue rose 21.7% year-on-year to US$56.9 billion, driven by strong demand for the iPhone 17 range. The result marks the first time Apple has claimed the top position in global smartphone market share in the March quarter, according to research firm Counterpoint.

Gross profit margins came in at 49.3%, ahead of analyst forecasts, while Services revenue grew 16.3% for the quarter, outpacing a consensus estimate of 14%. Apple shares rose more than 4% in after-hours trading following the results.

China Rebound

China delivered notable upside, with iPhone sales climbing 28% in the quarter, following 38% growth in the prior period. Counterpoint attributed Apple’s resilience in the premium segment to its ability to absorb rising memory and storage costs that are expected to weigh heavily on lower-end Android manufacturers.

Research firm IDC projects global smartphone shipments will fall 13% in 2026, with the steepest declines among budget Android device makers. Apple and Samsung, which operate at the premium end of the market, are expected to gain market share as a result.

Supply Constraints a Concern

Despite the strong headline numbers, Chief Financial Officer Kevan Parekh flagged that results could have been stronger were it not for constrained supplies of advanced chips. Apple’s primary memory supplier, Taiwan Semiconductor Manufacturing Co., has been diverting a greater share of its output to artificial intelligence chip customers including Nvidia, Google and Amazon, tightening supply for consumer device makers.

Parekh declined to comment directly on the impact of rising memory costs during the earnings call, but the issue is expected to remain a key pressure point for device margins industry-wide.

Leadership Transition

Cook, who noted it was his 89th earnings call, confirmed that incoming CEO John Ternus will assume the role on September 1. Cook cited the company’s recent financial performance as a factor in the timing of the transition.

Ternus, currently Apple’s head of hardware engineering, called the appointment an honour and pointed to Apple’s product roadmap as a source of confidence, though he declined to offer specifics.

The handover comes ahead of what is expected to be a pivotal product cycle. Apple is widely anticipated to launch a foldable iPhone before year-end, a move into a category where rivals have an established head start.

Counterpoint projects the device could capture close to half of North American foldable smartphone sales for the year.

AI the Key Challenge

The central challenge awaiting Ternus is Apple’s standing in artificial intelligence. While the company earns referral fees from OpenAI through consumer ChatGPT subscriptions on iPhone, Apple’s proprietary AI capabilities are widely regarded as trailing industry leaders — a vulnerability for a company that has long positioned itself at the frontier of consumer technology.

Figures in US dollars unless otherwise stated.