Apple (AAPL) reported strong Q1 2026 earnings on Thursday with $143.8 billion in revenue, driven by record iPhone sales. The company’s revenue revved up 16% year over year. while diluted earnings per share were $2.84, up 19% year over year. Additionally, Apple Finance chief Kevan Parekh said that Apple expects revenue this quarter to rise between 13% and 16% on an annual basis. This would be equivalent to between $107.8 billion and $110.66 billion, higher than Wall Street estimates.

Apple also saw particularly strong results in China, including Taiwan and Hong Kong. Sales in the region surged 38% during the quarter to $25.53 billion. Cook said that the performance in the region was driven by iPhone sales. “We set an all-time record for upgraders in mainland China, and we saw double-digit growth on switchers,” Cook said. Upgraders refer to current iPhone users who bought newer models, and switchers means new customers who previously had phones from different brands. In China, Apple “saw a lift that, frankly, was much greater than we thought we would see,” Cook said, adding that it was “product-driven.”

Apple Delivers on Earnings, but Why is AAPL Down?

While Apple (AAPL) earnings beat Wall Street estimates, AAPL stock is actually down in the last 24 hours. At press time, the stock has slipped just over 1%, with investors seemingly not convinced by the quarterly earnings. In fact, AAPL investors were more focused on comments made by CEO Tim Cook. During the earnings call, Cook said the global memory crunch will hit the company’s margins in the future. Apple projects margins of between 48% and 49% in Q2. Gross margins in Q1 were 48%.

While the AI bubble has proven fruitful for big tech giants like Amazon, Apple and Alphabet, the data center buildout has also put a massive strain on the market for memory chips. Hence, the price of smartphones, laptops, and any other consumer or enterprise devices could rise, as Apple has seemingly warned. That’s in addition to the already existing AI competition that AAPL investors take into consideration.

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Despite the dip, Wall Street analysts remain generally positive about Apple (AAPL) stock potential post Q1 2026 earnings. Wedbush and Tigress Financial are optimistic, with price targets of $350 and $305, respectively, indicating growth potential. At press time, AAPL sits at $256.