Finance
Apple forecasts strong sales growth as iPhone demand in Asia rebounds
Published by Global Banking & Finance Review®
Posted on January 29, 2026
5 min readLast updated: January 29, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on January 29, 2026
5 min readLast updated: January 29, 2026
Apple's profits exceed Wall Street estimates due to staggering iPhone demand, especially in China, with record sales figures.
By Stephen Nellis and Akash Sriram
Jan 29 (Reuters) - Apple on Thursday forecast higher-than-expected revenue growth of up to 16% for the March quarter, powered by strong demand for its iPhones and a sharp rebound in China and accelerating demand in India.
That followed holiday-quarter results that beat estimates as well, with CEO Tim Cook telling Reuters that demand for the latest handsets was "staggering."
Apple's iPhone 17 lineup helped lift sales across key markets in the company's fiscal first quarter ended December 27, easing investor concerns about a hardware sales plateau. The devices have been well received for their upgraded camera features and performance improvements, with Apple also benefiting from a wave of upgrades from users holding onto older models.
Apple shares rose 3.5% in extended trading after the results were released, but later pared gains to trade up 0.8%.
Apple expects revenue for its fiscal second quarter to grow 13% to 16%, versus a 10% rise that analysts expected, according to LSEG. The company also forecast operating expenses of $18.4 billion to $18.7 billion, slightly above spending in the first quarter.
The revenue forecast, however, bakes in some processor supply constraints that are affecting iPhone production, Cook told analysts on a conference call. Taiwan's TSMC makes Apple's chips.
"We're currently constrained. And at this point, it's difficult to predict when supply and demand will balance," he said, adding, "we're seeing less flexibility in supply chain than normal, partly because of our increased demand that I just spoke about."
Before the call, Cook told Reuters in an interview, "The demand for iPhone was simply staggering, with revenue growing 23% year over year to achieve its biggest quarter in history." He said on the call that the company gained market share in December.
MEMORY-CHIP CRUNCH TO PRESSURE Q2 MARGINS
Apple forecast gross margin of 48% to 49% in the second quarter. In the first quarter, it posted gross margin of 48.2%, above both its own guidance and analyst expectations of 47.45%, according to LSEG data. The result suggests that rising costs for DRAM memory chips and commodities such as gold have not yet shown up in Apple's results.
Cook said the memory chip crunch would be "a bit more of an impact" to second-quarter gross margin. "Beyond Q2 ... we do continue to see market pricing for memory increasing significantly. As always, we'll look at a range of options to deal with that."
A global shortage of memory chips has begun to ripple through the consumer electronics industry, tightening supplies of components used in smartphones, PCs and other devices. The situation has been worsened by a sharp shift in production priorities toward artificial intelligence, where advanced and high-bandwidth memory used in data centers commands far higher margins.
Samsung Electronics and SK Hynix, which control two-thirds of the DRAM chip market and count Apple as a customer, warned on Thursday that computer and smartphone companies were set to bear the brunt of a worsening shortage of DRAM chips.
IPhone revenue rose to $85.27 billion in the fiscal first quarter, well above the $78.65 billion analysts had expected. Apple said iPhone sales set records in every geographic segment, highlighting broad-based demand despite macroeconomic uncertainty.
"The backdrop of inflation-fatigued consumers and an ongoing memory chip shortage will pressure hardware margins in coming quarters, making that high-margin services momentum even more vital," said eMarketer analyst Jacob Bourne.
CHINA AND INDIA DEMAND IS STRONG
The iPhone maker posted quarterly revenue of $143.8 billion, up 16% from a year earlier, topping analysts' average estimate of $138.48 billion, according to LSEG. Cook said that the company now has an installed base of 2.5 billion devices. Earnings per share came in at $2.84, comfortably ahead of the $2.67 consensus.
Earlier this month, Apple announced its partnership with Alphabet's Google, which integrates the Gemini artificial-intelligence models into Apple's ecosystem, as part of its broader push to bolster AI features. On Thursday, Apple also acquired Q.ai, an AI startup focused on determining speech, moods or heart rates from minute facial expressions, for $1.6 billion in one of its largest-ever deals.
Sales in Greater China jumped 38% year-on-year to $25.53 billion, far exceeding the Visible Alpha estimate of $21.32 billion. Apple has faced pressure in China from local rivals and regulatory scrutiny, but Cook said that the iPhone hit a sales record there and that the iPhone 17 drove double-digit growth in the number of users switching from Android devices.
Apple does not disclose sales figures for India, a key growth market, but Cook told Reuters that the company saw "double-digit" sales growth, with revenue records for iPhones, Macs and other products. He also said Apple plans to open a second store in Mumbai, which will be its sixth store in India.
One notable miss compared with Wall Street expectations came in Apple's wearables, home and accessories segment, where sales were $11.49 billion, missing expectations of $12.04 billion. Apple last year released a product called AirPods Pro 3 that can translate between languages, and Cook said that demand for the new product caught Apple off guard.
"AirPods Pro 3 were supply-constrained during the quarter, and we think we would have grown year over year if we would not have been constrained," Cook said.
Mac revenue came in at $8.39 billion, slightly below analysts' expectations of $8.95 billion.
IPad sales rose to $8.6 billion, beating estimates of $8.13 billion, helped by steady education demand and continued traction for higher-priced iPad Pro models.
Revenue from the services segment, which includes Apple Music, iCloud and other software, climbed 14% to a record $30.01 billion, broadly in line with analysts' expectations of $30.07 billion.
(Reporting by Stephen Nellis in San Francisco and Akash Sriram in Bengaluru; Editing by Sayantani Ghosh and Matthew Lewis)
Quarterly revenue refers to the total income generated by a company during a three-month period, typically reported in financial statements.
Gross margins are a financial metric that shows the percentage of revenue that exceeds the cost of goods sold (COGS), indicating the efficiency of production.
The fiscal first quarter is the first three months of a company's fiscal year, which may not align with the calendar year.
Installed base refers to the total number of units of a product that are currently in use by customers.
Year-over-year growth compares a company's performance in one period to the same period in the previous year, often expressed as a percentage.
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