Apple Smashes March Quarter Record With $111B Revenue as Ternus Era Begins

Apple closed its fiscal second quarter with a performance that exceeded every analyst benchmark and set records across its two biggest revenue pillars — all while executing the most consequential leadership transition in its post-Jobs era.

Revenue for the three months ended March 28, 2026, reached $111.2 billion, a 17% increase from the $95.4 billion Apple reported in the same period a year earlier and well above Wall Street’s consensus estimate of roughly $110 billion. Net income rose to $29.6 billion, or $2.01 per diluted share, up from $24.8 billion ($1.65 per diluted share) a year ago — against analyst expectations of approximately $1.95 per share.

Gross margin expanded to 49.3%, up from 47.1% in the year-ago quarter, reflecting a richer product mix and the pricing discipline Apple has maintained despite intensifying competition in China and a complex global tariff environment.

iPhone 17: Still the Engine

iPhone revenue came in at $57 billion, up 22% year over year — the best iPhone performance Apple has ever reported in a March quarter. Executives attributed the result to the iPhone 17 family’s exceptional demand cycle, powered by Apple Intelligence features that began rolling out in iOS 18 and expanded significantly with this spring’s iOS 26 release.

Apple gained market share in most major markets during the quarter. In China, despite ongoing geopolitical friction and local competition from Huawei and Xiaomi, iPhone held its ground, aided by Gemini-powered Siri features that went live in Mandarin. The company’s installed base surpassed 2.5 billion active devices globally — a number Tim Cook called “the strongest foundation in Apple’s history.”

Services: Another All-Time Record

Services revenue hit $31 billion, an all-time record up approximately 16% from a year earlier. The category now runs at a $124 billion annualized rate, encompassing the App Store, Apple Music, Apple TV+, iCloud, AppleCare, Apple Pay, and the Apple Intelligence subscription tiers that began converting free AI users into paying premium customers earlier this year.

Gross margin for Services came in above 75%, making it Apple’s highest-margin segment and a key driver of the company’s overall profitability expansion. Mac revenue contributed $8.4 billion to the mix, helped by continued demand for M4-series MacBooks.

The Cook-to-Ternus Handoff

The most closely watched moment of Thursday’s call had nothing to do with financials. For the first time since Apple announced on April 20 that Tim Cook will step down as CEO effective September 1, incoming chief executive John Ternus joined an earnings call.

Cook, who has run Apple since Steve Jobs’s death in 2011, made a point of personally introducing Ternus to Wall Street analysts. “We have the right leader ready to step into the role,” Cook said, noting the succession plan had been in development for years rather than months.

Ternus — a 25-year Apple veteran who most recently oversaw hardware engineering across iPhone, iPad, Mac, and Apple Watch — kept his remarks deliberate but revealing. “And while you’re not going to get me to talk about the details of that roadmap,” Ternus said, “suffice it to say, this is the most exciting time in my 25-year career at Apple to be building products and services.”

Analysts interpreting that statement noted Ternus’s deep hardware roots. His ascent suggests Apple intends to double down on device-native AI, a philosophy that differentiates the company from hyperscalers like Google and Microsoft, which are spending hundreds of billions annually on cloud AI infrastructure. Apple’s approach — running powerful models locally on its Neural Engine chips, supplemented by server-side Private Cloud Compute that processes sensitive queries without exposing them to Apple’s own servers — has drawn significant industry attention as privacy-preserving AI becomes a competitive differentiator.

Apple Intelligence: Monetization Under the Microscope

Despite the strong headline numbers, a familiar question hung over the call: how, exactly, is Apple monetizing AI? Analysts pressed Cook and CFO Kevan Parekh for specifics on Apple Intelligence revenue contribution. The answers remained measured.

Cook reiterated that Apple Intelligence features are driving upgrade cycles and Services engagement, pointing to elevated subscription conversion rates in markets where the feature set has fully launched. He declined to break out AI-specific revenue, saying the company plans to “provide more clarity on our AI monetization strategy” in coming quarters — a task that now falls squarely to Ternus.

Apple’s AI spending posture is also notable for what it isn’t. Where Google, Microsoft, and Amazon have each committed more than $180 billion annually to AI infrastructure, Apple’s capital expenditures remain focused on chip design and targeted data center investments. The company’s partnerships with Google (Gemini-powered Siri) and OpenAI (ChatGPT integration) give it broad third-party AI coverage without the balance-sheet exposure of its hyperscaler peers.

Guidance and Capital Returns

Apple provided third-quarter guidance calling for revenue growth of 14% to 17% year over year, pointing to continued iPhone demand and accelerating Services growth even as the company faces potential tariff headwinds on hardware manufactured in Asia.

The board authorized an additional $100 billion in share repurchases — the largest single buyback authorization in Apple’s history — and raised the quarterly dividend to $0.27 per share, up from $0.25. Together, the moves underscore management’s confidence in sustained cash generation even as peers dramatically expand infrastructure spending.

Apple shares rose approximately 2.5% in after-hours trading following the report, extending a recovery from earlier-year pressure tied to tariff concerns.

The Ternus Question

Cook’s fifteen-year tenure has transformed Apple into the world’s most valuable company and generated cumulative shareholder returns that few corporate leaders can match. But as he prepares to hand over the reins, the question Wall Street is really asking is whether Ternus can do for AI what Cook did for Services — find the business model inside a technology shift that competitors have been first to capitalize on.

The September event, when Apple typically unveils its next iPhone generation, now carries extraordinary symbolic weight: it will be Ternus’s debut on the biggest stage in consumer technology, and probably Apple’s clearest statement yet about what its AI-first future looks like.

For now, the numbers say the company arrives at that moment from a position of exceptional strength.