February 1, 2026
Margins High, Comment Section Higher
Apple's Q4 2025 margin on Services was 76.5%
Apple’s services money machine hits 76.5% — fans fume, analysts shrug
TLDR: Apple says its services business keeps 76.5 cents of every dollar, while overall margins hit records. Commenters split between calling it a user-hostile “cartel” and noting subscription giants do the same, with some hoping AI helps people escape paid clouds.
Apple just flexed: Services gross margin hit 76.5%, overall gross margin was 48.2%, and guidance says 48–49% next. Execs chalked it up to “mix” (translation: more high-margin services and a strong iPhone cycle). Cue the fireworks: the comments went full courtroom drama. One camp is furious, calling it a “greedy” squeeze on users and pointing to legal receipts — a reader cites the Epic case noting 75% App Store fees, and another drops an iCloud antitrust filing alleging 78% margins. The vibe: Apple’s profits are sky-high, user happiness is not.
Then the hall monitors show up: “Relax, this is gross margin (money left after making the service, before other costs), and this is the services segment — software subscriptions often have margins like this,” says one commenter, comparing Apple to Google, Microsoft, and Salesforce. Translation: this is normal for big software shops.
Meanwhile, meme-makers declared “Welcome to Margin City,” and joked the future iPhone will be free if you pay $29.99/month for everything else. Another hot take: hardware becomes a loss leader while services milk the profits. And the plot twist? Tech optimists want AI to help “normies” self-host their own cloud and dodge fees — skeptics replied that DIY cloud means you just became your own tech support. Tim Cook didn’t spill secrets, but the crowd did: boom times for Apple, boiling temps in the comments.
Key Points
- •Apple’s Q1 gross margin was 48.2%, above the high end of guidance and up 100 bps sequentially.
- •Product gross margin reached 40.7% (up 450 bps), and services gross margin reached 76.5% (up 120 bps).
- •Management attributed margin gains to favorable product mix and operational leverage, aided by a strong iPhone cycle.
- •Apple guided next quarter gross margin to 48–49%, reflected at the high end in the margin chart.
- •Tim Cook said supply constraints stem from advanced SoC nodes; memory had minimal impact on Q1 margins, with more impact expected in Q2 already included in guidance.