Shares of Apple Inc. edged lower in after-hours trading on Thursday, slipping 0.48% despite the company delivering better-than-expected fiscal second-quarter results, as investors weighed strong product demand against ongoing supply constraints.
The company posted revenue of $111.18 billion and earnings of $2.01 per share for the quarter ended March 28, beating analyst expectations of $109.46 billion and $1.95 per share, respectively.
The performance underscores continued consumer demand for Apple’s ecosystem, particularly its flagship smartphone lineup.
iPhone demand drives revenue growth
iPhone sales remained the primary growth engine, rising 21.7% year-on-year to nearly $57 billion.
The gains were fueled by strong demand for the iPhone 17 lineup, as customers continued upgrading devices at a brisk pace.
However, sales came in slightly below expectations of $57.21 billion, reflecting supply constraints tied to advanced processor chips.
Chief executive Tim Cook acknowledged the impact, noting that demand exceeded supply.
“The demand was off the charts. And there’s just a little less flexibility in the supply chain at the moment for getting more parts,” Cook told Reuters.
Chief Financial Officer Kevan Parekh also pointed to constraints in chip availability, as suppliers such as Taiwan Semiconductor Manufacturing Company allocate more capacity to artificial intelligence chipmakers.
Despite these challenges, Apple benefited from strong momentum in China, where iPhone sales jumped 28% following a 38% increase in the previous quarter.
The company also secured the top position in global smartphone market share for the March quarter, according to Counterpoint Research.
Margins and product strategy support profitability
Apple’s profitability remained a key highlight, with gross margins coming in at 49.3%, above expectations of 48.38%.
The performance reflects the company’s ability to navigate rising component costs, particularly in memory and storage.
The product strategy under incoming CEO John Ternus has also played a role in sustaining demand.
Premium iPhone 17 models gained additional features at higher price points, while entry-level devices 17e and base iPhone 17 maintained stable pricing.
Beyond smartphones, Apple reported solid performance across other product categories.
Mac sales reached $8.4 billion, exceeding estimates of $8.02 billion, supported in part by the launch of the lower-cost MacBook Neo.
Analysts see the new device as a potential entry point into a broader market segment dominated by budget laptops, expanding Apple’s reach among price-sensitive consumers.
Services growth and leadership transition in focus
Apple’s services division continued to deliver steady growth, generating $30.98 billion in revenue, above analyst expectations of $30.39 billion.
The segment, which includes the App Store and subscription offerings, remains a key driver of high-margin revenue.
Other categories also performed well, with iPad sales reaching $6.91 billion and wearables generating $7.9 billion, both ahead of forecasts.
Geographically, Greater China revenue came in at $20.5 billion, surpassing expectations and signaling a continued recovery in a key market.
The company also announced an additional $100 billion share buyback authorization, maintaining its capital return strategy.
Attention is now shifting to the upcoming leadership transition, with Tim Cook set to step down in September.
With strong demand, resilient margins, and expanding product lines, Apple enters its next phase with momentum, though supply constraints and evolving AI strategies remain key areas to watch.
The post Apple shares dip after earnings despite strong iPhone sales growth appeared first on Invezz
