Apple Q2 Earnings Beat Expectations, AI-Driven Dual Strength in Mac/iPhone, Positive on Supply Chain Allocation Opportunities

Overview

Nomura Securities issued Asia Apple Supply Chain Earnings Review Report. The report states Apple FY26 Q2 (March quarter) performance was strong, revenue hit historical high for the quarter, primarily benefiting from robust sales of iPhone 17 series and explosive growth in Mac product line AI applications. Although facing challenges of restricted advanced process chip supply, institutions expect high sales volume of iPhone 17 series to offset gap from partial new model launches in H2. Based on this, Nomura raised Apple's 2026 Mac production forecast and reiterated Buy ratings on multiple core beneficiaries in the supply chain.

Core views

Structural differentiation on demand side, iPhone and Mac become core engines. iPhone business performed excellently, single quarter revenue reached USD 57 Billion, +22% YoY. Mainly driven by iPhone 17 series, achieved double-digit growth in most markets including US, LatAm, Greater China, Western Europe, and India. Active user base hit historical high, upgrade user count also set March quarter record. Mac product line welcomed new growth point, revenue USD 8.4 Billion, +6% YoY. Besides regular MacBook Neo, Mac mini and Mac Studio for AI and Agentic AI applications saw demand exceed expectations, despite supply restrictions, still pushed Mac total installed base to record growth. Services and other categories grew steadily. Service revenue reached USD 31 Billion, +16% YoY, again hit historical high. iPad revenue +8% YoY, Wearables (wearable devices), Home & Accessories revenue +5% YoY. From geographic regions, Greater China performed best, revenue +28% YoY, Americas, Europe, Japan, APAC other regions all achieved 12%-25% growth. Profit quality improved, Gross Margin exceeded expectations. Overall Gross Margin 49.3%, +110 bps QoQ, higher than guidance upper limit and Bloomberg consensus. Mainly benefited from favorable product mix structure, tariff-related cost decline, though partially offset by seasonal leverage effect weakening and memory cost rise. Future Outlook and Capacity Constraints. Management guided next quarter (June quarter) revenue +14-17% YoY. Current main supply bottleneck lies in iPhone SoC (Advanced Node Chips). For Mac, due to high demand from AI tool usage, multiple models still face supply restrictions. In addition, management warned memory costs will have increasingly significant impact in H2 and beyond, possibly prompting Apple to adjust base storage capacity pricing strategy. Key Judgments from Supply Chain Perspective. Nomura expects 2026 H1 iPhone EMS production volume +24% YoY. Although H2 may see slight order cuts due to chip restrictions, iPhone 17 series annual high output (~133.6 Million units) will fully cover H2 three new models (incl foldable screen) quantity gap compared to last year's four new models. Meanwhile, significantly raised 2026 MacBook Neo production forecast to 10-12 Million units, thereby raising full-year Mac total production forecast from 26.7 Million units to 30 Million units (YoY +30%).

Analysis framework

Top-down combined with bottom-up analysis path. First, by breaking down Apple latest financial data core figures (Revenue, Category Income, Gross Margin), verify macro-level demand sentiment. Second, using Supply Chain Checks method, convert terminal product demand into upstream EMS production assumptions. For example, based on observations on iPhone 17 series demand and assessment of H2 chip restrictions, derive annual shipment model. Finally, combining Product Lifecycle Theory, analyze marginal contribution of specific new products (like MacBook Neo, Foldable Screen iPhone, AirPods with IR Camera) to different links in supply chain (Assembly, Optical Lens, Thermal Material, Laser Equipment), thereby screening specific investment targets with valuation advantages and incremental logic.

Methodology notes

• Industry/Industrial Analysis FrameworkUpstream-Midstream-Downstream Transmission

  Upstream-Midstream-Downstream Transmission

  The research report derives EMS manufacturing (Midstream) production demand from Apple terminal products (Downstream) sales data and installation base changes, further refines to component suppliers (Upstream) Volume-Price logic, showing transmission chain from Brand Business Performance to Supply Chain Enterprise Profits.

• Event Gaming & Behavioral FinanceExpectation Gap/Expectation Management

  Expectation Gap/Expectation Management

  Report focuses on difference (Beat/Miss) between Apple actual performance (e.g., Mac Sales, Gross Margin) and Market Consensus (Bloomberg consensus), and analyzes how management guidance on future memory costs and pricing strategy affects market expectations for subsequent quarter profit margins, reflecting capture of expectation gaps.

• Company Fundamentals & Financial FrameworkOperations/Financial Leverage Analysis

  Operations/Financial Leverage Analysis

  When explaining Product GM QoQ decline, report explicitly mentions 'seasonal loss of leverage', indicating institutions consider fixed cost allocation changing with sales volume financial leverage principle when analyzing gross margin fluctuations.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Hon Hai (Foxconn, 2317 TT)

  Core EMS beneficiary, benefits from AI device shipment growth

  Strengths

  Valuation attractive, AI business brings revenue enhancement

  Risks

  Advanced node chip supply restrictions cause shipments below expectation

• Luxshare (Luxshare Precision, 002475 CH)

  Core assembly and component supplier

  Strengths

  Valuation attractive, AI business brings revenue enhancement

  Risks

  Memory cost rise erodes gross margin

• Largan (Largan Precise, 3008 TT)

  Optical lens supplier

  Strengths

  Benefits from Variable Aperture (VA) lens spec upgrade

• AAC (AAC Technologies, 2018 HK)

  Acoustic and haptic feedback supplier

  Strengths

  Benefits from VC (Vapor Chamber) thermal solution upgrade and new AI device demand

• Cowell (Cowell Precision, 1415 HK)

  Test equipment supplier

  Strengths

  Gains market share in iPhone and new AirPods IR camera testing

• Han's Laser (Han's Laser, 002008 CH)

  Laser processing equipment supplier

  Strengths

  Benefits from VC and VA part processing tool demand, and potential iPhone casing 3D printing technology

  Risks

  3D printing technology application time later than expected (CY2027F)

Key data

• Q2 FY26 Total RevenueUSD 111.2 Billion+16.6% YoY, -22.7% QoQ, Hit Historical High for March Quarter, Exceeded Bloomberg Consensus
• iPhone RevenueUSD 57 Billion+22% YoY, Hit Historical High for March Quarter
• Mac RevenueUSD 8.4 Billion+6% YoY, Driven by AI Demand
• Greater China RevenueUSD 20.5 Billion+28% YoY, Far Exceeds Consensus (+8.4% Deviation)
• Consolidated Gross Margin49.3%+110bps QoQ, Exceeds Guidance Upper Limit
• 2026 Total Mac Production Forecast30 Million UnitsRaised vs Previous Forecast, +30% YoY
• 2026H1 iPhone Production Forecast+24% YoYDriven by Strong Demand for iPhone 17 Series

Impact & implications

Apple's strong performance indicates its market share in global smartphone and PC markets continues to expand, especially layout in AI hardware entry points transforming into actual replacement demand and premium pricing for high-end models. For supply chain, MacBook Neo's low-end penetration strategy and iPhone 17 series high-end volume release will bring definite production volume growth to EMS manufacturers. Meanwhile, with AI features extending to wearable devices (e.g., AirPods with IR Camera), optical and sensor supply chains welcome new incremental space. However, memory cost rise and advanced process chip supply bottlenecks are pressure points and delivery risks to watch closely in short term.

Risks

• Advanced node SoC supply remains restricted, could lead to H2 iPhone order cuts
• Memory cost surges, could force Apple to raise base version prices, affecting consumer demand or compressing margins
• Foldable iPhone mass production delay
• iPad lacks new product marketing appeal, sales may decline

What to watch

• H2 iPhone SoC (Advanced Node) supply bottleneck relief status
• Specific pricing strategy adopted by Apple against memory cost rises (whether increase base storage SKU price)
• Actual mass production scale of Foldable iPhone in Q4 2026 (Currently forecast 7 Million units)
• Market acceptance of MacBook Neo and potential cannibalization effect on MacBook Air
• Supply chain preparation for 2026 H2 new AirPods (with IR Camera)