Apple's Upgrade Cycle: How AI and Silicon Drives Growth
Apple's stock surge over the past year, returning 55% compared to the S&P 500's 23%, may seem surprising at first. However, according to Trefis, Apple itself was publishing signs of an upgrade cycle months before it began.
The company reported in its fiscal Q1 2025 results that markets where Apple Intelligence had launched showed stronger year-over-year performance for the iPhone 16 family than those without it. This trend continued in the following quarters, with Mac revenue up 16% year over year and a silicon line management described as designed for AI workloads.
The financials were also bending towards growth: by fiscal Q3 2025, revenue was growing at 6.0% year over year, compared to an average of 1.8% in the previous three years. However, it wasn't until fiscal Q3 2026 that the upgrade cycle reached its peak, with revenue reaching $109.4 billion and iPhone revenue rising 22% on the iPhone 17 family.
The key driver behind this growth was AI availability, which tracked with better iPhone performance according to Apple's own reports. However, management attributed the constraint behind this growth to a demand forecast miss and advanced-node chip supply unable to follow iPhone and Mac sales.