In a fiercely competitive market, Apple's first-quarter earnings report has drawn significant industry attention. While the company reported a 4% year-over-year revenue increase , concerns emerged over weakening iPhone sales, particularly in China where sales declined by 11.1% , sparking investor anxiety about future growth prospects.

Services Business Offsets Hardware Weakness

The tech giant found its saving grace in its thriving services division, which propelled Apple to a record 46.9% gross margin — the highest in company history. This performance eclipsed the previous record of 46.6% set in March 2024, demonstrating Apple's successful pivot toward non-hardware revenue streams.

Second Quarter Outlook

For the upcoming quarter, Apple anticipates revenue growth in the low-to-mid single digits , with its services segment expected to deliver low double-digit growth. However, the company warned that a strong US dollar would create a 2.5% headwind to overall sales. When accounting for currency fluctuations, the growth rate is projected to mirror the 6% achieved in the first quarter.

Profit Growth and Hardware Highlights

Apple's net income rose 7.1% to $36.33 billion , up from $33.92 billion in the year-ago period. The earnings report revealed a strong rebound in iPad and Mac sales following last year's holiday season slump. Notably, Mac revenue surged 15% to $8.98 billion , marking its best performance since the fourth quarter of fiscal 2022.

Despite facing challenges in key markets, Apple continues to demonstrate resilient competitiveness through its robust services business and the untapped potential of its hardware portfolio, positioning the company to navigate an increasingly complex global marketplace.