Apple shares rallied more than 4% on Thursday, marking the company's sharpest stock increase since August, following the release of better-than-expected fiscal second quarter results and bullish guidance for the upcoming quarter [1]. CEO Tim Cook, who is set to step down in September after 15 years, highlighted strong demand for the iPhone 17 family—described as the 'most popular lineup in our history'—and robust sales of Mac models, including the recently launched lower-cost MacBook Neo, which has seen 'higher-than-expected demand' since its March release [1].
For the fiscal third quarter ending in June, Apple projected revenue growth between 14% and 17% year-over-year, significantly outpacing analysts' expectations of 9.5% growth [1]. In the fiscal second quarter, Apple reported revenue of $111.18 billion, a 17% increase from $95.4 billion a year earlier, surpassing analyst estimates of $109.66 billion according to LSEG [1]. The company exceeded estimates in Mac, iPad, and services revenue, though iPhone sales fell short of expectations [1]. Services revenue grew approximately 16% to $30.98 billion from $26.65 billion a year ago, leveraging Apple's base of over 2.5 billion active devices [1].
Apple's gross margin reached 49.3% in the latest quarter, up from 48.2% in the previous period, and the company forecasted a margin between 47.5% and 48.5% for the June quarter [1]. Despite ongoing supply constraints and rising memory costs, which CEO Cook expects to intensify, analysts at Morgan Stanley expressed confidence in Apple's margin management, raising their fiscal year earnings per share estimate to $8.89 from $8.63 and maintaining a buy recommendation [1]. KeyBanc analysts, however, noted that Apple's margin forecast does not reflect the anticipated impact of higher memory prices and maintained a hold rating [1].
Investor sentiment remained positive, with most unconcerned about the lack of detailed answers regarding Apple's strategy to address soaring memory costs [1]. The company's continued profit growth, particularly in its high-margin services segment, contributed to the upbeat market reaction [1].
CONCLUSION
Apple's strong Q2 results and optimistic Q3 guidance drove a significant rally in its shares, reflecting investor confidence in the company's ability to manage supply challenges and maintain margin growth. While analysts remain watchful of rising memory costs, the overall market takeaway is positive, with upward revisions to earnings estimates and continued support for the stock.