Apple Surges on Strong iPhone 17 Demand Despite Rising Memory Costs February 9, 2026
Company Overview
Apple Inc. stands as one of the world’s leading technology companies, primarily known for its innovative consumer electronics, including the iPhone, which serves as its flagship product and primary revenue driver. The company operates globally with a strong presence in key markets including China, maintaining a premium position in the smartphone ecosystem.
iPhone 17 Cycle Shows Exceptional Momentum
The iPhone 17 lineup continues to demonstrate remarkable strength, with current demand significantly outpacing supply constraints. Management has guided for 2Q26 revenue growth of 13-16% year-over-year, supported by sustained iPhone sales momentum. The strength appears broad-based, with record mobile phone upgraders across multiple geographies and double-digit growth in brand switchers contributing to the robust performance.
China Market Delivers Pleasant Surprise
A particularly noteworthy development has been the sharp rebound in China, where revenue jumped 37.9% year-over-year after four years of flat to negative growth. This represents a meaningful upside for Apple, given that China contributes approximately 18% of total revenue. The iPhone 17 lineup has resonated strongly with Chinese consumers, evidenced by double-digit growth in in-store traffic and robust upgrader activity.
Investment Outlook and Risks
Phillip Securities Research has raised FY26 revenue and PATMI assumptions by 2% and 3% respectively, while increasing the terminal growth rate from 3.0% to 3.5% to reflect long-term monetisation potential from Apple’s collaboration with Google’s Gemini. However, rising memory costs are expected to become more pronounced in coming quarters, posing margin headwinds. The firm remains cautious given Apple’s current valuation of approximately 30.7x forward FY26 P/E, noting the stock remains in a “prove-it” phase.
Strong Financial Performance Drives Upgrade
The team has also upgraded Apple from REDUCE to NEUTRAL, raising the target price to US$260 from the previous US$230. This revision reflects the company’s impressive 1Q26 performance, where revenue grew 16% year-over-year to US$143.8 billion, marking the fastest growth in four years. The standout performer was iPhone revenue, which surged 23% year-over-year to US$85.3 billion, achieving an all-time high for the product category.
Frequently Asked Questions
Q: What was Apple’s financial performance in 1Q26?
A: Apple delivered strong 1Q26 results with revenue of US$143.8 billion, growing 16% year-over-year, representing the fastest growth in four years. iPhone revenue reached US$85.3 billion, up 23% year-over-year and achieving an all-time high.
Q: What is Phillip Securities Research’s current recommendation and target price for Apple?
A: Phillip Securities Research upgraded Apple from REDUCE to NEUTRAL with a target price of US$260, raised from the previous US$230, based on a DCF model with an unchanged WACC of 6.5%.
Q: How is the iPhone 17 performing in the market?
A: The iPhone 17 lineup shows exceptional strength with demand outpacing supply, supported by record upgraders across geographies and double-digit growth in switchers. The cycle appears durable with broad-based strength.
Q: What drove the strong performance in China?
A: China revenue surged 37.9% year-over-year, marking a sharp rebound after four years of flat to negative growth. The iPhone 17 lineup resonated strongly with Chinese consumers, with double-digit growth in in-store traffic and robust upgrader activity.
Q: What are the main risks facing Apple going forward?
A: Rising memory costs are expected to become more pronounced in coming quarters, posing margin headwinds in the long run. The stock remains in a “prove-it” phase at current valuations.
Q: What is management’s guidance for the next quarter?
A: Management guided 2Q26 revenue growth of 13-16% year-over-year, supported by continued iPhone sales momentum and the strength of the iPhone 17 cycle.
Q: How significant is the collaboration with Gemini for Apple’s future?
A: The collaboration with Google Gemini strengthens Apple Intelligence and supports sustained ecosystem engagement, contributing to Phillip Securities Research’s’ decision to increase the terminal growth rate from 3.0% to 3.5% to reflect long-term monetiszation potential.
Q: What percentage of Apple’s revenue does China represent?
A: China contributes approximately 18% of Apple’s total revenue, making the recent rebound in this market a meaningful upside for the company’s overall performance.
This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst.
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About the author
Helena Wang
Helena covers Hardware/Marketplaces/ETF. Helena graduated with a master's degree in Financial Technology from Nanyang Technological University.
