Apple (AAPL) CEO Tim Cook and company will take center stage on Thursday when the company reports its first quarter earnings results. The Street is looking for a strong showing on the strength of Apple’s iPhone 17 sales and Services segment.

During Apple’s fourth quarter earnings call, Cook said the company anticipates first quarter revenue to be the “best-ever for the company and the best ever for iPhone.” That’s set some big expectations for the company’s results.

But there’s more going on in Apple World than iPhone sales. The company, like many in the tech industry, is contending with a worldwide memory shortage caused by the global AI data center buildout, which is driving up prices on the key components.

That could put pressure on Apple’s margins or force the company to raise iPhone prices in the coming months.

There’s also the matter of Apple’s latest AI moves. Earlier this month, the company and Google (GOOG, GOOGL) issued a joint statement saying that Apple will use Google’s Gemini models and cloud technology to power its AI efforts, including a more personalized Siri due out later this year.

According to Bloomberg’s Mark Gurman, though, there will actually be two updates to Siri. The first will include features Apple originally showed off at its WWDC 2024 event, while the second will feature a new chatbot-like interface meant to go toe-to-toe with the likes of OpenAI’s ChatGPT.

For the quarter, Apple is expected to report earnings per share (EPS) of $2.68 on revenue of $138.4 billion, according to a Bloomberg analyst consensus estimate. That’s an improvement from the $2.40 and $124.3 billion the company saw in Q1 last year.

Importantly, iPhone revenue is anticipated to come in at $78.3 billion, up 13% from the $69.1 billion the segment generated in the first fiscal quarter of 2025. Services revenue is estimated to top $30 billion, up 14%.

Revenue out of China, a weak spot for the company in 2025, is expected to jump nearly 18% year-over-year.

Apple is riding high on the back of its iPhone 17 line of products, Bernstein analyst Mark C. Newman wrote in a note to investors Tuesday.

“Strong iPhone sales continued into December with [calendar Q4 2025 and Q1 2026] sell-through revenue up 12% [year-over-year],” he said.

According to Newman, Apple’s December global sales climbed 7% year-over-year, with performance “driven by the iPhone 17 series alongside steady contributions from the iPhone 16.”

Some of the growth, Newman explained, is a result of customers who purchased new phones during COVID, upgrading to Apple’s latest iPhones six years later, coupled with the introduction of the iPhone 17’s updated styling.

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But the iPhone Air, which features the biggest design changes to the company’s flagship device in years, hasn’t been selling well, with customers instead opting for the standard iPhone 17 or Pro models, according to The Information, citing IDC data.

Investors will also be looking for any information regarding the impact of the ongoing memory shortage caused by AI data center construction. Data centers use a type of memory called DRAM, or dynamic random access memory. Consumer products, however, also use DRAM.

DRAM for data centers is used to build high-bandwidth memory, while consumer goods like smartphones use DRAM to make double data rate (DDR) memory. Generally speaking, the more DDR memory, the faster a device runs. It’s one of the main specs you’ve likely seen when shopping for a new computer or phone.

DRAM suppliers are currently focusing more on building high-bandwidth memory than DDR, thanks to higher margins on data center parts. And that's starving the broader market for DDR, driving up prices.

Prices on NAND, a type of storage, have also jumped due to data center demand. That appetite is in focus as the world's biggest tech companies step up an AI spending spree, with Meta (META) on Thursday revealing plans to invest up to $135 billion this year.

Morgan Stanley’s Erik Woodring wrote in an investor note on Monday that he believes Wall Street is underestimating the potential impact of the memory shortage on Apple’s margins.

“Since last year, memory price inflation has become more severe — for context, in the March quarter, NAND prices are now expected to increase 55-60% [quarter-over-quarter] (vs. 15-25% [quarter-over-quarter] about a month ago), while mobile DRAM prices are now expected to increase 53-58% Q/Q,” he wrote.

While Woodring said he doesn’t expect a significant impact on Apple’s March quarter, he said that Morgan Stanley is now taking higher memory prices into account for its margin forecasts. The analyst also said he anticipates Apple will raise prices on its upcoming iPhone 18 family of devices by $100, which would leave his estimates for fiscal 2027 gross profits and EPS unchanged.

Apple’s AI strategy will also be in focus during the company’s earnings call. While Cook doesn’t tip his hand during earnings reports, he has given some general hints about Apple’s AI strategy at times in recent quarters.

That said, Cook will likely discuss Apple’s tie-up with Google on the call, perhaps providing more color about the companies’ plans, but don’t expect him to go into deep details.

Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.

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