Apple Inc.

Apple's fiscal 2026 net sales rose 15% to $478.8 billion, led by iPhone (+21% to $254.1 billion) and Services (+13% to $123.3 billion), with net income of $132.2 billion and diluted EPS of $8.98. Gross margin rose to 48.8%, partly because of tariff refunds and product mix, while R&D jumped 32% on AI infrastructure. The company flags intensifying memory and storage supply constraints and rising costs, and heavy AI-related risk disclosure. It returned about $101.5 billion to shareholders through $85.8 billion of buybacks and $15.7 billion of dividends.

1. 1.Net sales grew 15% to $478.8 billion versus 6% growth in 2025, with iPhone up 21% to $254.1 billion and Greater China up 28% to $82.4 billion.
2. 2.Gross margin percentage rose to 48.8% from 46.9%, with Products margin up to 39.3% from 36.8% due to mix and tariff refunds, partly offset by higher memory costs.
3. 3.R&D expense rose 32% to $45.8 billion (10% of sales versus 8%), driven by infrastructure costs including AI investment and headcount.
4. 4.Inventories rose to $14.5 billion from $5.7 billion (components $10.4 billion versus $2.1 billion), and vendor non-trade receivables rose to $39.9 billion from $33.2 billion.
5. 5.Operating cash flow rose to $145.1 billion from $111.5 billion, while capex fell to $9.0 billion from $12.7 billion and net income rose 18% to $132.2 billion.
6. 6.The Supreme Court struck down certain IEEPA tariffs in February 2026 and Apple applied for refunds, recognized as a reduction of products cost of sales; the Supreme Court also agreed in June 2026 to review the civil contempt standard in the Epic Games case; effective tax rate rose to 17.0% from 15.6%.

1. 1.Industry-wide supply constraints and rising costs for advanced semiconductors, memory and storage, which Apple expects to intensify for memory and storage, with price increases possibly not offsetting them and potentially reducing demand.
2. 2.Access to compute capacity and data centers for AI is constrained and costly, with long-term commitments that raise capital expenditures and obligations; AI investments may not be profitable.
3. 3.Expanded AI risks, including autonomous agents acting in unintended ways, nondeterministic outputs, AI-enhanced cyberattacks, regulatory uncertainty and IP claims from model training.
4. 4.App Store and regulatory exposure: the Epic Games injunction on link-out commissions (now before the Supreme Court), EU Digital Markets Act fines of up to 10% of worldwide net sales, DOJ antitrust suit, and interoperability mandates that have caused features such as Siri AI to be withheld in some jurisdictions.
5. 5.Google search licensing revenue could be harmed if remedies from the Google antitrust case are reversed on appeal, or if the arrangements are not renewed on favorable terms.
6. 6.Tariffs, trade restrictions and geopolitical tension affecting a supply chain concentrated in China mainland, India, Japan, South Korea, Taiwan and Vietnam, with refunds of any rescinded tariffs not assured.