How Apple defied the odds to post the biggest quarterly profit ever

APL.03.20.Apple Watch Series 5
An Apple Inc. employee, right, assists an attendee with an Apple Watch at an Apple store during a product launch event in Sydney, Australia, on Friday, Sept. 20, 2019. Apple's new iPhones with camera enhancements and improved battery life go on sale today. Photographer: Brendon Thorne/Bloomberg via Getty Images
Brendon Thorne—Bloomberg/Getty Images

Well, the bears blew this call. Many on Wall Street worried Apple was stagnating at this time last year, pinned under the weight of slowing iPhone sales and a failure to produce new market-dominating products. The stock fell 38.8% from its 2018 high through January 2019. But what a difference a year makes. Not only are iPhone sales climbing, but both the Apple Watch and AirPods are also huge successes, driving 37% year-over-year growth in the wearables division and helping Apple notch the highest quarterly ­profit ever reported ($22.2 billion in the company’s first quarter). Then there’s Services, which if broken out separately as a company would be No. 66 on the Fortune 500 by revenue. Apple’s stock has come roaring back, giving the company more than 40 times the market capitalization of Ford Motor. “The bears were dead wrong—as wearables have proven. They underestimated the iPhone upgrade cycle, which has been a home run for Apple over the past year, with the iPhone 11 front and center,” says Daniel Ives, managing director of equity research at Wedbush Securities. Though the coronavirus is sure to impact Q2 in terms of production, Apple keeps defying the odds. 

A version of this article appears in the March 2020 issue of Fortune with the headline “The Golden Apple.”

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