Apple CEO forecasts holiday quarter iPhone sales that top Wall Street estimates

Apple reported fiscal Q4 revenue and EPS that exceeded analyst expectations, primarily driven by strong performance in Services, Mac, and Accessories, which compensated for an iPhone sales miss attributed to supply constraints and regulatory delays in China for new models. CEO Tim Cook subsequently provided an optimistic holiday quarter (Q1 fiscal 2026) forecast, projecting double-digit year-over-year iPhone sales growth and 10-12% overall revenue growth, both surpassing Wall Street estimates, leading to a 3.7% after-hours stock increase. This outlook signals robust demand and an anticipated return to growth in China, despite ongoing supply challenges for certain iPhone 17 models, as the company also progresses on AI feature development.

Analysis

Apple reported fiscal Q4 revenue of $102.47 billion and EPS of $1.85, both exceeding analyst expectations of $102.26 billion and $1.77 respectively. This beat was driven by strong performance in Services ($28.75 billion vs. $28.17 billion est.), Mac ($8.73 billion vs. $8.59 billion est.), and Accessories ($9.01 billion vs. $8.49 billion est.). The company missed iPhone sales forecasts, reaching $49.03 billion against an estimated $50.19 billion, primarily due to supply constraints on new iPhone 17 models and regulatory delays for the iPhone Air in China.

CEO Tim Cook provided an optimistic outlook for the holiday quarter (fiscal Q1 2026), forecasting double-digit year-over-year iPhone sales growth and overall revenue growth of 10-12%. These projections surpass Wall Street estimates of 9.8% iPhone sales growth and 6.6% total sales growth to $132.53 billion. The positive guidance, including an expected gross margin of 47-48% (above 46.9% est.), led to a 3.7% rise in Apple shares during after-hours trading.

Despite ongoing supply constraints for several iPhone 17 models, Apple anticipates a return to growth in China, where sales contracted in Q4 due to the iPhone Air delay. The company is also making "good progress" on AI features for Siri, with major updates expected next year, addressing investor concerns about its AI lag. Tariff-related costs are projected to increase to $1.4 billion in the current quarter, up from $1.1 billion in Q4.

Key Decisions for Investors

• Monitor resolution of ongoing iPhone 17 supply constraints, as their persistence could temper actual Q1 results despite strong demand.
• Evaluate the pace and sustainability of Apple's anticipated return to growth in the Greater China region, a key market for revenue expansion.
• Track the development and market reception of Apple's upcoming AI features for Siri, which are crucial for addressing competitive positioning and future innovation.
• Assess the impact of increasing tariff-related costs on gross margins, as CFO projects $1.4 billion for the current quarter.