Services Boost Apple's Profit Margin

Services have not only been Apple’s main growth driver over the past decade, but they have also helped the company become even more profitable. In the first nine months of fiscal 2026, Apple’s gross margin reached a record level of 49.1 percent, up from just 38.5 percent in 2017. While the latest jump in Apple's margin was partly driven by a tariff refund recognized in Q3 2026, the main driver of the upward trend over the past decade has been the company's booming services business. Since 2017, the gross margin of Apple’s services improved from 55 percent to 76 percent, which is almost double the gross margin of Apple's hardware business.

The positive effect of growing services margins was further amplified by Apple’s growing reliance on the segment. In 2017, services accounted for 13 percent of Apple’s total sales. In the first nine months of fiscal, that share was almost twice as high at 25 percent, as services are on track to exceed $120 billion in revenue this year. These numbers highlight how important services have become to Apple - not only from a growth perspective, but also from a profitability point of view.