Apple delivers a nearly perfect quarter, with a CEO change and an AI update ahead

An important development from the financial markets: Apple on Thursday evening reported a strong quarter to wrap up a busy week of megacap earnings. Clearly, CEO Tim Cook's decision to announce his upcoming departure ahead of the release was a move to ensure that news would not overshadow the incredible results. Revenue in Apple's fiscal 2026 second quarter ended March 31 increased 17% to $111.

2 billion, well ahead of the $109. 7 billion expected, according to LSEG. Earnings per share jumped 22% to $2.

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01, ahead of estimates of $1. 95, according to LSEG. AAPL 1Y mountain Apple 1 year performance In fact, it was the best March quarter in company history, and Apple stock jumped 4% in after-hours trading to around $282.

A close Friday at that level would be just shy of its December record high. Bottom line While Cook will remain at the helm for a bit longer, it's clear that incoming CEO Jon Ternus is set to inherit a very strong hand. Sales came in ahead of expectations for all product categories as well as for the highly profitable services business, where growth accelerated on a sequential basis.

Better yet, earnings growth outpaced revenue growth as the company was able to expand profit margins for both products and services to a level above what the Street was looking for. Apple, once again, achieved an all-time high installed base of active devices — over 2. 5 billion — across all product categories and geographic segments.

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That's crucial because — while we are still waiting to hear more about Apple's Siri AI initiative, and Cook did affirm on the call that "a more personalized Siri" will indeed be coming this year — the opportunity for Apple to officially enter the generative/agentic AI race is as strong as ever. Apple has chosen Google as its AI partner. Cook also said, "We're happy with the work that we're doing independently as well.

" While Services punches way above its weight class for earnings, thanks to a gross margin profile that is nearly double that of the products category, it's the installed base of active devices that represents the gateway through which those services can be sold. So, the larger the installed base, the larger the total addressable market for Apple's high-profit services offerings. Lastly, regarding share repurchases, Apple's board authorized another $100 billion buyback program and authorized a 4% increase to the company's cash dividend payout.

Noteably, CFO Kevan Parekh said on the call, "We plan to continue our capital allocation philosophy of first making all the necessary investments needed to support the business and then returning excess cash to shareholders over time. Net cash neutral has been a valuable framework for our capital structure. Since 2018, we have significantly rightsized our balance sheet and reduced net cash by over $100 billion.

Financial markets are tracking the development closely as investors assess the likely impact.