Apple’s (AAPL) guidance for the December quarter could be the company’s strongest period ever, driven by a robust iPhone refresh cycle. The hardware giant forecasts revenue to grow between 10% and 12% year-over-year (YoY) in the holiday quarter. In fiscal Q1 of 2025 (ended in December), Apple reported sales of $124.3 billion. At the midpoint estimate, Apple’s sales are forecast to grow to $138 billion in Q1 of 2026, above consensus estimates of $132.3 billion.
Citi analyst Atif Malik highlighted the record-breaking nature of this upgrade cycle, noting customers are flooding in from all previous iPhone generations. The analyst emphasized that the rate of upgrades and the total number of upgrading customers are rising simultaneously, while brand-new customers continue to enter the Apple ecosystem, which is quite sticky.
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Features like the advanced camera system and ultra-thin iPhone Air design are driving consumer enthusiasm, while CEO Tim Cook attributed the bullish outlook to “off-the-chart” demand for iPhone 17 devices and increased store traffic globally.
Several iPhone 17 models remain supply-constrained, which indicates that demand is outpacing the company’s ability to manufacture devices. Apple also estimates that growth in China will turn positive in fiscal Q1, following a 4% decline in Q4.
In the quarter ended in September, Apple reported revenue of $102.47 billion, an increase of almost 9% YoY. Services sales rose by 15% to $29 billion, while Mac sales increased by 13%. Citi raised the price target for AAPL stock from $245 to $315, indicating an upside potential of 16% from current levels.
The installed base of active devices reached all-time highs across every product category and geographic segment, providing a massive foundation for future services revenue growth and hardware upgrades.
As stated earlier, Services sales rose 15% to $29 billion, which is an all-time record for the iPhone maker. The high-margin business showcased strength with double-digit growth across most categories and markets.
Payment services reached an all-time revenue record, driven by double-digit growth in Apple Pay active users. For the full fiscal year, Services generated over $100 billion in annual revenue, representing a 14% YoY increase.
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