Apple Continues to Gain Market Share in China. Here's What It Means for Investors.

The past few years have been rife with uncertainty for Apple (NASDAQ: AAPL). The impact of inflation on consumer demand, tariffs, rising input costs, and smartphone saturation are just a few of the issues of interest to shareholders.

Another area of concern is weakening smartphone demand in China, one of Apple's biggest markets. However, there was news on that front that was decidedly positive for the iPhone maker and its shareholders.

Image source: The Motley Fool.

Market share gains

Smartphone sales in China have struggled so far this year, but the iPhone bucked that trend, according to data compiled by Counterpoint Research. Apple posted the strongest first-quarter growth among major brands in China, as iPhone shipments surged 20% year over year, even as overall smartphone shipments declined 4%.

To provide context, Apple's biggest rivals in China -- Huawei and Vivo -- each saw shipments increase by 2%, while all the other major brands saw declining sales.

This is the continuation of a trend from late last year. In the fourth quarter of 2025, Apple was the leader in China's smartphone market, with 22% of the market, as sales jumped 28% year over year, according to Counterpoint.

The findings were echoed by Apple CEO Tim Cook during the company's fiscal 2026 first quarter (ended Dec. 27). Apple reported a record-breaking quarter, with Cook saying demand for the iPhone was "simply staggering." Those sales records extended to China, where sales increased 38% year over year, with Cook declaring that it "was the best iPhone quarter ever in China."

The strong showing marks a striking departure from Apple's struggles in China over the past few years. Competition from low-cost rivals bit into sales, dragging on Apple's overall results. A return to form in the country is positive news for shareholders and likely bodes well for the future.

A potential boon to investors?

Apple has been flat thus far in 2026 (as of this writing), as geopolitical and economic concerns have weighed on the stock. The company is scheduled to report the results of its fiscal 2026 second quarter (ended March 29) after the market close on Thursday, April 30.

Wall Street is forecasting conservative revenue growth of 14% in Q2 and 12% for the fiscal year. Apple's sales increased by 16% in Q1, suggesting analysts are expecting growth to slow for the remainder of the year. However, if sales in China are as strong as the data suggests, investors could be underestimating Apple.

Indeed, the average analyst price target of $296 suggests about 10% upside for the year, but Wedbush analyst Dan Ives maintains a price target of $350, implying potential gains for investors of 30% over the coming year. The analyst argues that Apple's foray into artificial intelligence (AI), strong iPhone 17 sales, and a host of product updates will drive the stock higher in the coming year. I think his argument is right on the money.

One area investors should watch is the company's margins, as surging memory costs and discounts could eat into Apple's profits.

The stock is selling for 34 times earnings, but Apple's long track record of consistent execution explains why it deserves a premium and why I believe Apple stock is a buy.

Danny Vena, CPA has positions in Apple. The Motley Fool has positions in and recommends Apple and is short shares of Apple. The Motley Fool has a disclosure policy.