Apple Surges on Strong iPhone 17 Demand and Forecast, Warns of Chip and Memory Cost Pressures

Mintesinot Niggusie

Apple reported stronger-than-expected sales growth and issued an upbeat revenue forecast for the current quarter on Thursday, driven by robust demand for its iPhone 17 and MacBook Neo, sending its shares up nearly 4 percent in after-hours trading.

The company said it expects sales growth of 14 percent to 17 percent in the fiscal third quarter, above Wall Street estimates of 9.5 percent growth to 102.93 billion US dollars, according to LSEG data. The guidance, alongside a 100 billion US dollars share buyback programme, helped lift investor sentiment as Apple navigates supply-chain pressures and rising competition in artificial intelligence.

For the fiscal second quarter ended March 28, Apple reported revenue of 111.18 billion US dollars and earnings of 2.01 US dollars per share, both ahead of analyst expectations of 109.66 billion US dollars and 1.95 US dollars per share.

iPhone sales, which remain Apple’s largest revenue driver nearly two decades after the product’s launch, came in at 56.99 billion US dollars, slightly below estimates of 57.21 billion US dollars. Chief executive Tim Cook said shipments were constrained by limited availability of advanced processor chips used in the iPhone 17 lineup.

He said the chips are produced using a variant of Taiwan Semiconductor Manufacturing Company’s technology, which is also used in leading artificial intelligence processors, contributing to supply tightness.

Mac sales reached 8.4 billion US dollars, surpassing estimates of 8.02 billion US dollars, supported in part by early sales of the MacBook Neo. Priced at 500 US dollars for students, the device is seen by analysts as Apple’s push into a lower-cost laptop segment that could expand into a market worth about 20 billion US dollars, currently dominated by Chromebooks.

Gross margins for the quarter stood at 49.27 percent, above expectations of 48.38 percent, aided by existing memory chip inventory that helped cushion rising input costs.

However, Apple warned that memory-related expenses are expected to increase in the current quarter ending in June. The company forecast gross margins between 47.5 percent and 48.5 percent, slightly lower than the previous quarter’s level but still above analyst expectations of 47.6 percent.

Cook said higher memory costs would increasingly weigh on the business beyond the June quarter, noting that the company expects a “significant” rise in these expenses.

He also said Apple is seeking refunds for tariffs paid during the administration of former US President Donald Trump, adding that any recovered funds would be reinvested in US manufacturing.