Demand for running AI models locally pushed Apple's Mac business past Wall Street expectations in the quarter ended March 28, with the segment posting $8.4 billion in revenue — roughly $400 million above analyst consensus.

The Street had forecast low-$8 billion Mac sales and essentially flat year-over-year growth. Instead, Mac revenue rose 6% annually. Apple's total quarterly revenue reached $111.2 billion, up 17% from the prior year.

Why local AI caught Apple off guard

CEO Tim Cook told analysts on Thursday's earnings call that customers had adopted Mac mini and Mac Studio hardware for local AI inference faster than the company anticipated. Both models sold out in recent weeks.

"Both of these are amazing platforms for AI and agentic tools, and the customer recognition of that is happening faster than what we had predicted, and so we saw higher than expected demand," Cook said.

He singled out the Mac mini as the top-selling desktop in China, where demand for running local large language models has surged. Cook attributed part of the trend to growing interest in OpenClaw, an open-weights model popular with Chinese developers.

The MacBook Neo, which went on preorder March 4, also outperformed. Cook described demand as "off the charts" and said Apple set a quarterly record for first-time Mac buyers, partly driven by the Neo's lower price point and colorful design. Supply constraints on the Neo persisted through the quarter's end.

Enterprise purchases added momentum. Apple named Perplexity as one of several larger companies that had adopted Mac as their preferred platform for building AI assistants.

School systems are shifting hardware budgets too. Cook noted that Kansas City Public Schools had dropped Chromebooks in favor of the MacBook Neo.

Supply constraints likely to persist

Despite the beat, Mac revenue was flat sequentially, a sign that the AI-driven surge has not yet compounded quarter over quarter.

Cook warned that supply-demand balance on the Mac mini and Mac Studio could take "several months" to restore. The MacBook Neo faces similar constraints.

"We're not at the point where we're saying this constraint is going to end anytime soon. And it's not because of a problem, per se, other than we just under-called the demand," he said.

Apple expects to remain supply-constrained on Mac mini, Studio, and Neo through the current quarter, which ends in late June. Investors will watch whether the local-AI tailwind translates into sustained growth or proves to be a one-quarter pull-forward driven by product launches.