Earlier in September, Apple shares hit record prices.
Apple CEO Tim Cook shared that the company’s latest 2Q2025 results saw “double-digit growth in iPhone, Mac and Services”. The growth is spread across their global user base too.
This continues to hold true as Apple most recently released the latest iPhone 17.
Here’s what’s driving Apple shares sky high prices:
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1. Apple’s 2Q2025 Hit Record Revenue and Income
For 2Q2025, Apple posted revenue of $95 billion. Apple’s earnings are cyclical, following product cycles. This quarter’s revenue was a June quarter record, up 10% y/y.
Meanwhile, net income came in at $23 billion. This was also a June quarter record. Gross margin was 46%.
2. Apple’s iPhone Still the Biggest Profit Driver
Apple breaks its revenue into five categories. These include its three well-known products: the iPhone, Mac and iPad.
Wearables, Home and Accessories are the next category, with Services being the last.
Here’s a breakdown for the current quarter.
Now, the iPhone makes up nearly half of Apple’s total revenue. This quarter, it contributed 47%.
2Q2025 was a June quarter record for iPhone revenue, at $44 billion. This was up 13% y/y.
Management notes the iPhone 16 family largely drove the sales. Growth was also seen across every geographic segment. In the emerging markets, sales saw double-digit growth.
iPad and Mac each make up less than 10% of revenue. That said, Mac revenue was $8 billion this quarter, up 15% y/y.
Likewise, growth in sales was spread across the geographic segments. In Europe, Greater China and the rest of Asia Pacific, growth was double-digit.
iPad was the only product category that saw an 8% y/y dip in revenue. This came in at $7 billion. However, this is compared to the 2Q2024 numbers, which was when Apple launched the iPad Air and iPad Pro.
3. Record Revenue for Apple Services
Apple Services are the second largest revenue contributor. This quarter, it made up 29% of Apple’s revenue.
Apple Services refers to their suite of entertainment services (Apple Music, Apple Books, Apple TV+ etc.). This includes the App Store and Apple’s cloud storage service, iCloud.
Services revenue reached $27 billion this quarter, up 13% y/y. Apple CEO Tim Cook noted that this was an “all-time revenue record”. Growth in iCloud paying accounts drove the growth in revenue.
Overall, paid subscriptions have grown, and the company reports over 1 billion paid subscriptions.
4. Apple and the AI Stack
Like the other tech giants, Apple is investing heavily into the AI stack.
During its earnings call, CEO Tim Cook shared the company has released more than 20 AI features. It has since launched new enhancements via iOS 26, which launched on 26 Sep 2025.
On feature release, Apple’s focus is on features that are “deeply personal, private and seamlessly integrated”.
Given its loyal fan base, this will only help to realise its bets on AI features they are developing. On this front, management highlighted that they are increasing investment in AI, as well as in data centres.
6. Headwinds: Tariffs, Supply Chain, Costs
Apple’s earnings are challenged by the tariff costs. During 2Q2025, the company incurred ~$800 million of tariff-related costs.
This is expected to rise the following quarter at $1.1 billion assuming tariffs policies do not change.
That said, the team is trying to optimize their supply chain to cut costs where possible. This is by shifting more operations to the US.
For instance, they are presently building chips in Arizona. They’re also building semiconductors across 12 states in 24 factories. In all, they’ve committed to $500 billion investment in the US over the next four years.
What Lies Ahead for Apple?
Good revenue growth is still expected for 3Q2025. The company said this will be between mid to high single-digit percent.
I believe the expectation for revenue growth is well within reach.
Now, Apple shares hit a high reaching US$256. This is riding on the popularity of the newly released iPhone 17 that was announced on 9 Sep.
On the back of the popularity of their core physical products, Services growth rate was advised to match the June quarter. In spite of the rising costs expected from tariffs, gross margin was expected to be within range of 2Q2025, between 46% to 47%.
My final thoughts
One thing Apple does very well is its retention of its customer base. It’s focused on customer satisfaction levels. These are above 95% in the US, which makes up 43% of Apple’s global market.
Outside of the US, the customer base is also rapidly expanding in other markets in Europe, Greater China and the rest of Asia Pacific. Active installed base – or active Apple device users – grew to all time highs for iPhone, Mac and iPad in 2Q2025.
This has a concrete impact on revenue via two streams.
- Firstly, via upgraders, which are successful cases of customers staying within the Apple ecosystem. 2Q2025 was a June quarter record for upgraders across iPhone and Mac.
- Secondly, a high number of active Apple users also helps to support Services growth. This, as we know, is at an all time high and is expected to rise.
In all, Apple delivered a solid quarter. Services are growing fast, and its iPhone had a standout performance.
I believe the company is doing the right things to manage trade risks and costs by shifting production. There is clearly room for steady growth through the rest of 2025 which we continue to see.
