Apple reported an 8% rise in fourth-quarter revenue to $102.5bn (as expected). Growth was broad, with iPhone sales up 6% to $49.0bn ($50.2bn expected), while Mac and iPad also saw modest gains. Services revenue rose 15% to $28.8bn.
Operating profit rose 10% to $32.4bn, and full year free cash flow came in at $98.8bn. Net cash, including longer term securities, stood at $33.8bn.
Apple declared a dividend of $0.26 per share and repurchased $90.7bn of stock during the year.
For the coming quarter, Apple expects revenue growth of 10–12%, with iPhone sales expected to grow by double digits year-over-year, despite ongoing supply constraints. Tariffs remain a headwind of about $1.4bn.
The shares rose 4.3% in after-hours trading.
Our view
It’s remarkable how a successful iPhone launch can shift sentiment. The narrative around Apple has quickly moved from concerns over its AI strategy to excitement over strong iPhone 17 demand and renewed hopes that 2026 will finally bring a truly compelling AI product.
iPhone sales missed the mark over the quarter, but guidance for the holiday season stole the show, with expectations for record revenue and double-digit iPhone growth in the coming quarter. The story here is strong demand held back by supply, something that should be fixed by Christmas.
We’ll hold up our hands. The latest iPhone has been more successful than we thought. It’s not a game-changer, but there were enough new features to give people a reason to upgrade. We still aren’t quite on board with the narrative that a massive spike in sustained iPhone sales growth is coming.
AI offers a solution on paper, but Apple hasn’t been able to adapt quick enough. Apple Intelligence is a country mile from the ‘wow’ experience that was promised. Hopes are now tied to an AI-powered Siri that should arrive in the first half of 2026 – and it needs to be a success.
Services growth is likely to remain a key profit driver going forward, including areas like the App Store and Apple Music. This part of the business is higher margin, as adding users doesn’t carry the same costs as building a MacBook or iPhone. But for Services to reach its full potential, it still depends on growing hardware sales.
Tariffs continue to cost around $1.1bn per quarter, so guidance for record gross margins in the coming quarter was impressive. Easing US–China tensions are encouraging, too, but Apple needs to reduce its manufacturing dependence on China. India, Vietnam, and the US are key to that shift - and credit to CEO Tim Cook, often criticised for a lack of innovation, he is a master of supply chain management.
There was a regulatory win to call out too. Alphabet (Google’s parent company) has been allowed to continue paying Apple (in the order of $15-20bn a year) to have Google as the default search engine on Apple devices.
All in, Apple’s brand is so strong that it’s well placed to navigate the uncertainty ahead. iPhone sales are key, and demand looks strong despite a lack of value add from AI, which bodes well if it can execute next year. That said, we think the valuation looks about right given the challenges ahead, and there are no guarantees.
Environmental, social and governance (ESG) risk
The technology industry is low-risk in terms of ESG, though some segments like Electronic Components are more exposed to environmental risks. Business ethics tends to be a material risk within the tech sector with everything from anti-competitive practices to intellectual property rights weighing. Historically the sector has flown under the radar when it comes to regulatory oversight, but more recently we’ve seen regulators keen to get involved given the high-profile of some of the “big tech” names. Other key risk drivers include labour relations, data privacy, product governance and resource use.
According to Sustainalytics, Apple’s management of ESG risk is strong.
Apple is facing legal pressure on multiple fronts, with lawsuits and investigations over antitrust practices tied to the App Store, Apple Pay, and developer restrictions - leading to billions in fines across the EU, UK, and US, while prompting policy changes like lowering fees and allowing third-party app stores in Europe.
Apple key facts
All ratios are sourced from LSEG Datastream, based on previous day’s closing values. Please remember yields are variable and not a reliable indicator of future income. Keep in mind key figures shouldn’t be looked at on their own – it’s important to understand the big picture.
This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by LSEG. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.
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