Apple reported $109.4 billion in revenue for the quarter ended in June—its fiscal third quarter—representing 16% growth year-over-year. Net income rose to $29.8 billion and diluted earnings per share were $2.02, both beating analyst expectations. Despite the top-line beat, the stock fell nearly 7% in after-hours trading.
Which segments drove performance?
iPhone sales were the primary growth driver: iPhone revenue jumped from $44.6 billion a year earlier to $54.3 billion, about a 22% increase and above analyst estimates. Mac revenue also performed strongly, rising 29%. By contrast, iPad sales declined.
The Services segment reached a record $30.7 billion in revenue but missed consensus estimates. Revenue from Greater China totaled $18.8 billion—an increase year-over-year but below what analysts had expected.
Management: demand is strong, supply is the constraint
On the post‑earnings call, Chief Executive Officer Tim Cook said demand for iPhone and Mac is unexpectedly robust and that the company’s current problem is not weak demand but difficulty meeting it. Apple is facing growing supply constraints that, after affecting Macs, could also impact iPhone and iPad availability.
The core issue is a shortage of the most advanced semiconductors. A large share of the high-end chips Apple needs are produced by Taiwan Semiconductor Manufacturing Company (TSMC), but advanced manufacturing capacity is heavily utilized worldwide. The explosion in artificial intelligence adoption has generated significant demand for high-performance memory and advanced chips, further straining capacity.
Costs, pricing and margin pressure
Analysts warn that rising memory prices could pressure Apple’s margins. Apple has already raised prices on some Mac and iPad models; iPhone prices have not been increased so far. Many market participants expect the next iPhone generation this fall to carry higher prices.
Several analysts also note that the greater risk may not be margin compression itself but that higher prices could dampen sales. A slowdown in iPhone volumes could, over time, slow expansion of Apple’s installed base, which would in turn limit growth of its highly profitable Services business.
One‑time items and financial notes
Apple’s gross margin rose to 50.1 percent; two percentage points of that increase were due to tariff rebates, representing roughly $1.1 billion of one‑time benefit. The company said it will direct that amount toward U.S. investments.
Leadership change imminent
This was Tim Cook’s final quarterly report as CEO: Apple said John Ternus will take over leadership on September 1, 2026.
Why it matters
The results show Apple’s core hardware franchises remain powerful, but they also highlight vulnerability in the global semiconductor supply chain and the market impact of AI-driven demand for advanced chips. Misses in Services and China revenue demonstrate investor sensitivity to the composition of growth and to near-term operational risks.
This article is not investment advice.
