Apple beats out earnings estimates with continued iPhone momentum

Apple posted strong results for its quarterly earnings on Thursday, but investors’ attention is also focused on the upcoming CEO change and the tech firm’s artificial intelligence strategy.

Apple CEO Tim Cook announced earlier this month he will be stepping down from the role, with Apple’s head of hardware engineering, John Ternus, assuming the role later this year.

The January-March results announced Thursday reflect the continued momentum of iPhone sales. Cook said in a statement that it was the company’s best March quarter ever, with “double-digit growth across every geographic segment.”

The company earned $29.58 billion, or $2.01 per share, in the January-March period, up about 22% from the same period a year earlier.

Revenue rose about 17% to $111.18 billion from $95.36 billion a year earlier. iPhone sales made up the bulk of revenue, bringing in $56.99 billion.

The Cupertino, California company beat analyst expectations this quarter. Analysts surveyed by FactSet Research forecast earnings of $1.95 per share on revenue of $109.46 billion.

In the previous quarter that ended in December, the company said it reached record-high iPhone sales, even though it still hasn’t delivered on its long-promised revamp of Siri assistance with AI. iPhone achieved a March quarter revenue record, fueled by strong demand for the iPhone 17 lineup.

This March, Apple introduced the new iPhone 17e and the MacBook Neo, an entry-level laptop, the company’s most aggressive attempts at moving into the affordable market.

High demand has caused supply constraints, Cook said on a conference call with analysts Thursday. Those constraints have been driven by the availability of the advanced technology used to form what is essentially a device’s brain. In the current quarter that runs through June, supply constraints will affect several Mac models, in part because the “customer response to Mac Neo has just been off the charts” with higher-than-expected demand, Cook added.

The company also saw higher memory costs in the recent quarter and expects “significantly higher” memory costs moving forward, Cook said, telling analysts that beyond the current quarter, “we believe memory costs will drive an increasing impact on our business, and we’ll continue to evaluate this.”

“Apple showed that even the best operators can’t fully escape the memory squeeze,” said Jake Behan, Direxion’s head of capital markets, in a statement. “Tim Cook’s warning of ‘significantly higher’ costs in the coming quarters tells you how real the AI-driven supply crunch has become for the entire industry.”

Cook did follow up on the Siri promise, saying that Apple will bring “a more personalized Siri” to users this year, but did not elaborate on timing. He also teased new software and developer tools and AI advancements. Apple’s systems deliver “intelligence that is fast, personal and private,” Cook said. “This is not AI as a standalone feature, but AI is an essential, intuitive part of the experience across our devices.”

Cook has helmed Apple for 15 years, inheriting the CEO role from the late Steve Jobs. During his tenure at the head of the company, the company’s market value soared by more than $3.6 trillion during an iPhone-fueled era of prosperity.

Ternus will start as CEO on Sept. 1, and Cook will remain involved with the Cupertino, California company as executive chairman.

Ternus briefly joined a call with analysts after the results were posted Thursday, with Cook introducing him and emphasizing the confidence he has in his successor. Cook said he and Ternus will be working together closely over the next few months to make the transition as smooth as possible.

“This is the most exciting time in my 25 year career at Apple to be building products and services,” Ternus said. “There are so many opportunities before us, and I couldn’t be more optimistic about what’s to come.”