Apple's Services Revenue Growth Pressures Hardware Margins

Apple's latest quarterly report showed services revenue rising 14% to $24.2 billion, outpacing iPhone sales growth of 2%. The mix shift toward higher-margin services is compressing hardware margins as the company invests more in chip development and AI infrastructure. CFO Luca Maestri told analysts the services segment now accounts for roughly 28% of total revenue, up from 22% two years ago. The hardware gross margin slipped to 36.5% from 37.2% a year earlier, reflecting higher component costs and R&D spending. Apple's board authorized a new $90 billion share buyback, the same size as last year's program. The stock rose 1.8% in after-hours trading following the report.