Earnings Report
Apple (AAPL) FY2026 Q2 Earnings Report
One-Line Summary
Apple's revenue this quarter reached $111.2B, net income was $29.6B. iPhone remains the revenue pillar, Services (App Store, iCloud, Apple Music) deliver high-margin growth, and Apple Intelligence (Apple AI) is becoming the new engine of future growth.
📊 Stock Price & Market Cap
Data as of: May 14, 2026
Stock Price (AAPL)$297.7952-week range: $193.46 — $300.92
Market Cap$4.37TGlobal Top 5
P/E Ratio36.23xForward P/E: 32.91x
Plain Talk
- Apple's market cap of $4.37 trillion makes it the third most valuable company globally (just behind NVIDIA and Microsoft), still one of the most valuable companies in the world
- At $297.79, the stock is near its 52-week high of $300.92, up ~54% from its 52-week low of $193.46 — market confidence in Apple has recovered strongly from its lows
- A P/E of 36.2x — higher than Microsoft and Google, meaning the market premium on Apple is not just about earnings, but also about brand, ecosystem, and user "stickiness"
🏦 What Does Wall Street Think?
Data as of: May 2026 · Source: stockanalysis.com
Consensus RatingBuy29 analysts covered
12-Month Price Target$304.69↑ +2.3% vs. current price
Plain Talk
- Apple's analyst ratings are the most "conservative" of the three companies — only 20 buy, 7 hold, and 2 sell recommendations
- Analysts expect Apple to reach $305 over the next 12 months on average — only 2.3% above the current price of $298, suggesting they think Apple's stock is fairly valued with limited upside
- The 2 sell ratings likely come from concerns about slowing iPhone growth and slower-than-expected AI rollout pace
- Note: Analyst predictions are for reference only. Investing involves risk — please make your own judgment
💰 How Much Did They Earn?
| Metric | Current Quarter (FY2026 Q2) | Prior Quarter (FY2026 Q1) | Prior Year (FY2025 Q2) | YoY Change |
|---|---|---|---|---|
| Total Revenue | $111.2B | ~$124.0B | ~$90.5B | ↑ +22.9% |
| Gross Profit | $54.8B | ~$59.0B | ~$42.8B | ↑ +28.0% |
| Operating Income | $35.9B | ~$38.0B | ~$27.7B | ↑ +29.6% |
| Net Income | $29.6B | ~$31.0B | ~$23.6B | ↑ +25.4% |
| EPS | $2.01 | ~$2.10 | ~$1.53 | ↑ +31.4% |
Plain Talk
- Apple earns roughly $330M per day this quarter — about $3,800 per second
- Gross margin of ~49% — for every $100 of products/services sold, ~$49 in gross profit remains, which is extremely high for a global hardware company
- The prior quarter (FY2026 Q1, Oct–Dec 2025) is Apple's traditional "iPhone peak season" — higher revenue then is normal seasonal variation
- Net income grew 25% YoY, faster than revenue growth (23%), showing Apple's operational efficiency is improving
📊 Where Did the Money Go?
| Expense | Amount | % of Revenue | Notes |
|---|---|---|---|
| Cost of Revenue | $56.4B | ~51% | iPhone/Mac/iPad manufacturing costs, content licenses, etc. |
| R&D | $11.4B | ~10% | Apple Intelligence, chip development (A/M series), new products |
| Capex | ~$3.0B | ~3% | Data centers, retail store construction — very small relative to revenue scale |
Plain Talk
- Apple's R&D spending of $11.4B/quarter goes heavily toward custom silicon (A18, M4 series) and Apple Intelligence AI features
- Custom chips are Apple's secret weapon — the M4 chip's performance-per-watt ratio puts Mac and iPad far ahead of the competition
- Apple's capex is extremely low (~3%) because hardware manufacturing is outsourced to Foxconn, TSMC, etc. — no need to build factories
- Apple generates ~$24–27B in free cash flow per quarter, mostly used for stock buybacks and dividends
🏢 Two Major Business Segments
Apple's business divides into two segments: Products (hardware) and Services, with Services being the high-margin growth engine:
Products
iPhone, Mac, iPad, Apple Watch, AirPods, other wearables & accessories
Revenue share~75%↓ Declining share
iPhone share of total~55%↑ Still the anchor
Gross margin~37%↑ Improving
Plain Talk
- iPhone is Apple's lifeblood: One phone line drives ~55% of total revenue; the annual iPhone launch is the most important commercial event
- iPhone 16 series with built-in Apple Intelligence makes AI a new reason to upgrade, accelerating the upgrade cycle
- Mac (M4 chip) and iPad growth is steady; Apple Watch and AirPods in "Wearables" continue expanding
Services
App Store, iCloud, Apple Music, Apple TV+, Apple Pay, AppleCare insurance
Revenue share~25%↑ Expanding
Gross margin~75%↑ Far above Products
Growth rate~+15%↑ Sustained high growth
Plain Talk
- Services is Apple's secret weapon: Though only 25% of revenue, the 75% gross margin (vs. 37% for Products) contributes increasingly to overall profit
- App Store is Apple's most profitable single service: Apple takes 15–30% of every in-app purchase, with 1B+ iPhones globally as potential revenue sources
- Apple has over 1 billion subscribers (iCloud, Music, TV+ combined), providing stable monthly recurring revenue
- As the iPhone installed base grows, Services revenue naturally grows — this is the "flywheel effect"
Product Line Revenue Breakdown (Estimated)
| Product/Service | This Quarter (Est.) | Prior Year | YoY Change |
|---|---|---|---|
| iPhone | ~$61.2B | ~$46.0B | ~+33% |
| Services (App Store, etc.) | ~$27.8B | ~$23.8B | ~+17% |
| Mac | ~$8.9B | ~$7.2B | ~+24% |
| iPad | ~$6.7B | ~$5.5B | ~+22% |
| Wearables/Accessories (Watch/AirPods) | ~$6.7B | ~$8.0B | ~-16% |
Plain Talk
- iPhone stands out: Apple Intelligence features in iPhone 16 series drove strong upgrade demand, the fastest growth segment
- Services steady strong growth: +17% growth rate, and profit margin is double that of Products — Apple's most valuable future
- Wearables decline: Apple Watch and AirPods growth is slowing or slightly declining, market penetration may be approaching saturation
🏦 How Strong Is the Balance Sheet?
| Metric | FY2026 Q2 Quarter-End | Prior Quarter-End | Notes |
|---|---|---|---|
| Total Assets (Book) | $371.1B | ~$364.0B | Total company assets |
| Cash & Equivalents | $45.6B | ~$43.0B | Cash and short-term investments |
| Long-Term Debt | $82.7B | ~$85.0B | Long-term borrowings (actively declining) |
| R&D Spending | $11.4B/qtr | ~$10.5B/qtr | Increasing AI R&D |
| Stock Buybacks | ~$22.0B/qtr | ~$20.0B/qtr | Aggressive buybacks, increasing per-share value |
Plain Talk
- Note: Book value of $371.1B ≠ Apple's market value. Apple's market cap is ~$4.37 trillion, about 12x book value — brand, ecosystem, and user loyalty are Apple's real assets
- Apple is one of the world's largest stock buyback companies — spending ~$22B per quarter buying back its own stock, effectively returning cash to shareholders
- Long-term debt of $82.7B looks high, but Apple's annual free cash flow exceeds $100B — paying it off is no problem at all
- Apple borrows not because it needs cash, but because low interest rates make borrowing to fund buybacks (higher returns) a smart financial move
📈 What Changed vs. Last Quarter?
Improvements
- Services growth accelerating: Subscriber base keeps growing, high-margin revenue share is rising
- Gross margin hits new high: ~49% gross margin is a historical high, driven by Services
- Apple Intelligence taking hold: AI features maturing, upgrade demand likely to continue
Points to Watch
- Seasonal revenue decline: $124.0B → $111.2B, but this is a normal post-holiday peak pullback
- China competition intensifying: Huawei premium phone recovery is pressuring Apple's China market share
- App Store regulatory risk: EU and US are requiring Apple to open third-party payments, potentially impacting Services revenue
📅 Year-Over-Year Comparison
| Metric | FY2025 Q2 | FY2026 Q2 | Change |
|---|---|---|---|
| Revenue | ~$90.5B | $111.2B | +22.9% |
| Net Income | ~$23.6B | $29.6B | +25.4% |
| EPS | ~$1.53 | $2.01 | +31.4% |
| R&D Spending | ~$8.0B | $11.4B | +42.5% |
| Gross Margin | ~47% | ~49% | +2 percentage points |
Plain Talk
- In one year: revenue +23%, net income +25%, EPS +31% — EPS grew fastest because Apple's buybacks continuously reduce shares outstanding
- R&D up 42.5% — an unusually large increase for Apple, all-in on Apple Intelligence and next-gen chips
- Gross margin rose from 47% to 49%, mainly as Services (75% margin) continues to grow as a share of the mix
🎯 Key Points for Investors
1
iPhone super-cycle may be back
Apple Intelligence is the first iPhone feature to truly drive upgrades; the AI upgrade wave could deliver multiple quarters of strong growth
2
Services is the long-term value story
~25% of revenue but contributes more profit; as the iPhone installed base grows, Services revenue grows automatically at a 75% gross margin
3
Buybacks are shareholders' best friend
~$22B in buybacks per quarter continuously shrinks share count — even if net income is flat, EPS keeps growing
4
China and regulation are the biggest risks
Intensifying China market competition + global App Store regulatory pressure are the two core risks Apple currently faces