Shares of Apple edged higher on Thursday ahead of its fiscal second-quarter earnings report, with investors closely watching leadership changes, artificial intelligence strategy, and margin pressures tied to rising component costs.
The stock gained about 1.3% and was trading at $273.70. Apple stock has been muted in 2026 with less than 1% gain in the year so far.
Expectations are high as the iPhone maker prepares to release results after the market close.
Strong growth expected in earnings and revenue
Analysts surveyed by FactSet expect Apple to report net income of $28.52 billion, or $1.95 per share, up from $24.78 billion, or $1.65 per share, a year earlier.
Revenue is projected to reach $109.46 billion, compared with $95.36 billion in the same quarter last year.
A key focus will be iPhone performance, with revenue expected to climb 21% year-over-year to $56.5 billion.
Growth in the Mac segment is also in focus, with analysts forecasting a 2% increase to $8.12 billion, supported by demand for newer devices such as the lower-priced MacBook Neo and the Mac Mini.
Services, Apple’s highest-margin business, are expected to continue expanding, with revenue projected to rise 14% to $30.4 billion.
Strong product sales would likely support further gains in this segment, which includes offerings such as the App Store and Apple Music.
CEO transition and AI strategy under scrutiny
Investors are also assessing Apple’s leadership transition after the company confirmed that long-time CEO Tim Cook will step down on September 1.
He will be succeeded by John Ternus, the company’s head of hardware engineering.
The timing of the transition has raised questions among analysts.
“These will be big shoes to fill and the timing of Cook exiting stage left as CEO could make sense but also creates questions,” said Wedbush Securities analyst Dan Ives.
Other analysts view the move as a strategic shift.
“We see this move as a transition from Cook’s operations driven era to a more hardware, and engineering-led model under Ternus, signaling a renewed emphasis on product innovation and next-generation devices,” wrote Raymond James analyst Melissa Fairbanks.
Artificial intelligence is another key theme.
Investors are looking for updates on how AI will be integrated into Apple’s ecosystem, particularly improvements to its Siri chatbot.
However, expectations for major announcements remain limited ahead of the company’s Worldwide Developers Conference scheduled for June.
Margin pressures and market share gains in focus
Rising memory costs remain a concern for the broader tech hardware sector, as demand for AI-related components continues to outpace supply.
These pressures have forced several manufacturers to raise prices, though Apple has so far avoided significant price increases.
Analysts say this strategy may be helping the company gain market share, particularly in smartphones.
Data from Counterpoint Research showed iPhone shipments in China rose 20% year-over-year in the first quarter, even as overall shipments declined.
Greater China revenue is expected to increase 19% to $19 billion in the second quarter, despite ongoing competition from local players such as Huawei.
Still, investors will be watching closely for any signs that rising costs are impacting margins.
Product gross margins are expected to come in at 37.6%, up from 35.9% a year earlier.
While Apple’s stock has been less volatile than many of its tech peers, market participants remain focused on how the company navigates its transition phase.
Jed Ellerbroek, a portfolio manager at Argent Capital Management, said in a WSJ report that “Google, Amazon, Microsoft, I was on the edge of my seat for those. I’m not going to be on the edge of my seat tonight.”
With strong expectations already priced in, the upcoming results will be key in determining whether Apple can sustain its steady momentum.
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