Apple (AAPL 0.08%) demonstrated explosive growth in the 2026 fiscal first quarter (ended Dec. 27), reported last week, with a 16% increase in total revenue and a 23% increase in iPhone sales. While the win in iPhones is a reason to be excited about Apple and its future prospects, there was a different number that made an even bigger impression on me and has far-reaching consequences.
Image source: Apple.
It's all about the ecosystem
Apple has built up a robust ecosystem of products and services that work together and generate user loyalty. You can see that quite clearly in the iPhone sales growth; these are engaged customers who love Apple products and upgrade to new models. The iPhone 17 has been a huge hit, and sales have been driven by pro models, which are more expensive.
Notably, management said that demand was constrained by supply, implying that sales growth could have been higher. It also bodes well for second-quarter sales growth.
Mac sales were down 7% from the previous year, and management attributed that to extremely high sales in the fiscal 2025 first quarter. It pointed out that half of new Mac buyers were new users, and it's attracting new users to the platform.
The number of total active devices increased from 2.35 billion in the previous year to 2.5 billion in the 2026 first quarter. That's an incredible user base, and that's what I mean by the reason to buy Apple stock today.
NASDAQ: AAPL
Key Data Points
Monetizing the user base
There are 2.5 billion Apple devices in use today. That's an incredible amount from people all over the world who have bought into Apple's platform and rely on it for their tech purchases. That's the kind of economic moat Warren Buffett loves in a great business, and it's only increasing.
There are many ways Apple is monetizing its ecosystem on top of the iPhones and Macs fans use, including new devices like AirPods and Apple Watches. There's also the services business, which includes subscription services like Apple TV and Apple Fitness+, which boost revenue and margins.
The market soured on Apple last year after it delayed the relaunch of its signature Siri voice assistant and rolled out a bland group of artificial intelligence (AI) services, but it may impress investors as it introduces more in 2026. More importantly, users apparently have no problem with Apple Intelligence on iPhones. CEO Tim Cook said, "We're bringing intelligence to more of what people love, and we're integrating it across the operating system in a personal and private way. And I think that by doing so, it creates great value and that opens up a range of opportunities across our products and services."
Apple's incredible device ecosystem provides it with a long-term revenue stream, and its AI efforts are likely to keep users engaged and buying more for the foreseeable future.
