Apple forecasts 14-17% revenue growth as iPhone 17 demand defies memory crunch

Key facts

• Apple forecasts fiscal third-quarter revenue growth of 14% to 17%, above analysts' 9.5% estimate.
• CEO Tim Cook cited ongoing demand for iPhone 17 and Mac computers as growth drivers.
• Apple shares rose more than 3% on Friday after the earnings report.
• Cook said customer response to the MacBook Neo, released in March, has been 'off the charts' with higher-than-expected demand.
• Morgan Stanley analysts lifted their fiscal-year EPS projection to $8.89 from $8.63.
• Cook warned of an extended memory crunch and said Apple would 'look at a range of options' to address rising costs.

Quarterly results beat expectations as guidance soars past analyst targets

better-than-expected quarterly results late Thursday and issued revenue guidance for the current period that sailed past analysts' estimates. The company said revenue in the fiscal third quarter, which ends in June, will increase between 14% and 17% from a year earlier, while analysts were projecting growth of 9.5%. Apple shares jumped more than 3% on Friday following the announcement. The guidance reflects continued demand for the iPhone 17 family, which Cook called the 'most popular lineup in our history,' as well as for a number of Mac models.

CEO Tim Cook highlights demand for iPhone 17 and MacBook Neo

CEO Tim Cook, who is preparing to step down in September after 15 years at the helm, touted the company's performance in the face of significant supply constraints due largely to the global memory crunch. He cited ongoing demand for the iPhone 17 and Mac computers as driving the growth. In March, Apple released a lower-cost computer called the MacBook Neo. Cook said late Wednesday that customer response 'has just been off the charts, with higher-than-expected demand.'

Memory crunch poses risk; Apple explores options to manage costs

Analysts sought clarity from Cook regarding soaring memory costs, a trend the CEO only sees intensifying. Cook said the company would 'look at a range of options' to address the issue. Investors did not receive many specific answers but were mostly unconcerned. 'That does create some risk, but after last night's results, we feel much better about Apple's ability to manage margins than previously expected,' wrote analysts at to clients on Friday. 'It's the single-greatest source of our estimates moving higher post-earnings.'

Morgan Stanley raises earnings forecast on improved margin outlook

The Morgan Stanley analysts, who recommend buying the stock, lifted their earnings per share projection for the fiscal year to $8.89 from $8.63. The upgrade reflects increased confidence in Apple's ability to navigate the memory crunch and maintain profitability. Apple's guidance came amid a broader tech rally, with tech stocks posting their best month since the start of the Covid pandemic in 2020. Intel's stock more than doubled in April for the chipmaker's best month on Nasdaq in 55 years.

Apple's supply chain resilience tested by global memory shortage

The global memory crunch has created significant supply constraints for Apple, impacting production of key components. Cook warned that the trend is intensifying, posing a risk to future margins. However, the strong demand for iPhone 17 and Mac products has helped offset some of the pressure. Apple's ability to manage margins despite the memory shortage has reassured investors, as reflected in the stock's rise and analyst upgrades.

Outlook: Cook's final months at helm as Apple navigates headwinds

With Cook preparing to step down in September after 15 years as CEO, the company faces a leadership transition amid ongoing supply chain challenges. The strong quarterly results and optimistic guidance provide a solid foundation for the next chapter. Investors will be watching closely for further details on how Apple plans to address the memory crunch and sustain growth. The company's performance in the coming quarters will test its ability to manage both external pressures and internal succession.

The bottom line

• Apple forecasts 14-17% revenue growth for the fiscal third quarter, well above analyst estimates of 9.5%.
• iPhone 17 and MacBook Neo demand are key growth drivers, with the iPhone 17 called the 'most popular lineup in history'.
• CEO Tim Cook warns of an extended memory crunch and says Apple will explore options to manage rising costs.
• Morgan Stanley raised its fiscal-year EPS estimate to $8.89 from $8.63, citing improved margin confidence.
• Apple shares rose more than 3% after the earnings report, amid a broader tech rally.
• Cook is preparing to step down in September after 15 years, adding a leadership transition to the company's challenges.