Apple posted $98 billion in second-quarter 2026 revenue — beating Wall Street expectations by $6 billion — driven by the strongest iPhone upgrade cycle since the iPhone 6 era, as consumers rushed to upgrade for the AI features exclusive to iPhone 17.
The company shipped 73 million iPhones in the quarter, up 19 percent year-on-year. Apple Intelligence — the on-device AI suite launched with iPhone 17 — is now active on 580 million devices, with premium Apple Intelligence+ subscriptions ($9.99/month) reaching 45 million paid users, contributing meaningfully to services revenue.
Services Hit Record
Services revenue reached a record $28 billion, up 22 percent year-on-year. The segment now accounts for 29 percent of total revenue and carries gross margins above 74 percent — significantly higher than hardware. App Store, iCloud+, Apple TV+, and Apple Intelligence+ are the four largest contributors.
Margin Expansion
Overall gross margin expanded to 47.3 percent — the highest in Apple’s history — as the services mix improves and component costs stabilise. Earnings per share came in at $2.47, up from $1.89 a year ago. Free cash flow reached $31 billion for the quarter.
Guidance and Risks
Apple guided Q3 revenue of $100 to $102 billion, which would be its first $100 billion quarter outside of the holiday period. CEO Tim Cook said the company is on track for its first $400 billion annual revenue year.
The key risk: 24 percent of Apple’s manufacturing remains in China despite ongoing tariff uncertainty. Cook acknowledged elevated supply chain costs but said diversification into India and Vietnam is proceeding on schedule.
Source: Apple Inc / CNBC / Bloomberg
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