Apple Reports Strong Q1 Revenue Growth Amid iPhone Surge
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1h ago
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Source: Fool
- iPhone Sales Surge: Apple reported a staggering 23% increase in iPhone sales for Q1 2026, reaching $85.27 billion, significantly surpassing analyst expectations of $78.65 billion, indicating robust market demand that will likely drive overall revenue growth further.
- Overall Revenue Growth: The company's total revenue climbed 16% year-over-year to $143.76 billion, exceeding the analyst consensus of $138.48 billion, reflecting a recovery across multiple product lines, particularly in China where revenue surged by 38%, providing strong support for future performance.
- Margin Improvement: Apple's overall gross margin increased to 48.2%, with product margins rising by 450 basis points to 40.7% and service margins up by 120 basis points to 76.5%, showcasing successful cost management and pricing strategies, with expectations to maintain margins between 48% and 49% in Q2.
- Optimistic Outlook: Apple anticipates a revenue growth of 13% to 16% year-over-year for Q2 2026, with services revenue expected to grow at a comparable rate, although the stock's high valuation at a forward P/E ratio of around 31 may limit upside potential despite strong operational momentum.
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Analyst Views on AAPL
Wall Street analysts forecast AAPL stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for AAPL is 299.69 USD with a low forecast of 230.00 USD and a high forecast of 350.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
32 Analyst Rating
19 Buy
11 Hold
2 Sell
Moderate Buy
Current: 258.280
Low
230.00
Averages
299.69
High
350.00
Current: 258.280
Low
230.00
Averages
299.69
High
350.00
About AAPL
Apple Inc. designs, manufactures and markets smartphones, personal computers, tablets, wearables and accessories, and sells a variety of related services. Its product categories include iPhone, Mac, iPad, and Wearables, Home and Accessories. Its software platforms include iOS, iPadOS, macOS, watchOS, visionOS, and tvOS. Its services include advertising, AppleCare, cloud services, digital content and payment services. The Company operates various platforms, including the App Store, that allow customers to discover and download applications and digital content, such as books, music, video, games and podcasts. It also offers digital content through subscription-based services, including Apple Arcade, Apple Fitness+, Apple Music, Apple News+, and Apple TV+. Its products include iPhone 16 Pro, iPhone 16, iPhone 15, iPhone 14, iPhone SE, MacBook Air, MacBook Pro, iMac, Mac mini, Mac Studio, Mac Pro, iPad Pro, iPad Air, AirPods, AirPods Pro, AirPods Max, Apple TV, Apple Vision Pro and others.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Apple's Strong iPhone Sales, Stock Performance Lags
- iPhone Sales Surge: In fiscal Q1 2026, Apple reported iPhone sales of $85.27 billion, a 23% increase that surpassed analyst expectations of $78.65 billion, indicating robust market demand, with CEO Tim Cook describing it as 'staggering', which will drive overall revenue growth.
- Overall Revenue Growth: Apple's total revenue rose 16% year-over-year to $143.76 billion, exceeding analyst estimates of $138.48 billion, reflecting a recovery across multiple product lines, particularly in China where revenue increased by 38%, laying a solid foundation for future growth.
- Margin Improvement: Product gross margin increased by 450 basis points sequentially to 40.7%, while service margin rose by 120 basis points to 76.5%, resulting in an overall gross margin of 48.2%; despite rising memory prices, Apple expects to maintain gross margins between 48% and 49% in Q2, demonstrating effective cost control.
- Valuation Considerations: Despite strong operational momentum, Apple's forward P/E ratio is around 31, indicating that the stock is fairly valued, which may limit upside potential; analysts suggest that investors should be cautious when considering stock purchases at this time.
Continue Reading
Apple Reports Strong Q1 Revenue Growth Amid iPhone Surge
- iPhone Sales Surge: Apple reported a staggering 23% increase in iPhone sales for Q1 2026, reaching $85.27 billion, significantly surpassing analyst expectations of $78.65 billion, indicating robust market demand that will likely drive overall revenue growth further.
- Overall Revenue Growth: The company's total revenue climbed 16% year-over-year to $143.76 billion, exceeding the analyst consensus of $138.48 billion, reflecting a recovery across multiple product lines, particularly in China where revenue surged by 38%, providing strong support for future performance.
- Margin Improvement: Apple's overall gross margin increased to 48.2%, with product margins rising by 450 basis points to 40.7% and service margins up by 120 basis points to 76.5%, showcasing successful cost management and pricing strategies, with expectations to maintain margins between 48% and 49% in Q2.
- Optimistic Outlook: Apple anticipates a revenue growth of 13% to 16% year-over-year for Q2 2026, with services revenue expected to grow at a comparable rate, although the stock's high valuation at a forward P/E ratio of around 31 may limit upside potential despite strong operational momentum.
Continue Reading