Apple (NASDAQ: AAPL) reported $109.42 billion in revenue for its fiscal third quarter, topping the $108.65 billion consensus estimate compiled by analysts tracked by the London Stock Exchange Group (LON: LSEG). Despite the record-setting performance, shares fell more than 6% in after-hours trading as investors reacted to a cautious outlook for the current period, in which Apple expects sales growth of only 9% to 11%. The company attributed the softer guidance to supply chain constraints, an issue that has affected semiconductor-dependent industries across consumer electronics, automotive, and cloud computing throughout the post-pandemic period.

Profit also exceeded expectations. Apple posted earnings per share of $2.02, surpassing the $1.89 analysts had projected. However, the comparison is not strictly like-for-like, as tariff reimbursements contributed 11 cents to EPS. Net income climbed to $29.79 billion from $23.43 billion a year earlier, when per-share earnings stood at $1.57. Total revenue increased by more than 15% for the third consecutive quarter, and the company's cash position reached $146.52 billion, maintaining Apple's status as one of the most cash-rich companies in the S&P 500.

iPhone and Mac Drive Growth

The iPhone segment generated $54.25 billion in revenue, edging past the $53.86 billion analysts anticipated and representing nearly 22% year-over-year growth. The gains arrived late in the iPhone 17 product cycle, with the next hardware refresh slated for September, a launch window Apple has used consistently for its flagship smartphone lineup since 2011.

Mac revenue reached $10.35 billion, far exceeding the $8.74 billion forecast and marking an annual increase of close to 29%. CEO Tim Cook attributed the surge to robust demand for the MacBook Neo and the MacBook Pro. The MacBook Neo, a lower-cost notebook powered by a chip derived from Apple's iPhone silicon, launched in March just before the quarter began. Apple also raised prices on several Mac models during the period, including the MacBook Neo.

Supply chain pressures weighed on operations throughout the quarter. Shortages of memory chips and constrained processor manufacturing capacity drove up costs and limited component availability. Cook described the situation as "tough" and emphasized its importance during the earnings call. Apple relies on Taiwan Semiconductor Manufacturing Co. (TSMC) for its custom A-series and M-series processors, and Samsung and SK Hynix for memory components, making it sensitive to disruptions in the concentrated Asian semiconductor supply chain.

The iPad division had a more difficult quarter, with revenue declining 6% year-over-year to $6.19 billion, below the $6.92 billion estimate. Apple noted that the year-ago comparison was particularly challenging because a lower-priced iPad model had boosted sales during that period.

Wearables revenue came in at $7.88 billion, slightly above the $7.82 billion analysts expected. Separately, Apple reported that its wearables and home unit grew 6% to $4.9 billion, also surpassing forecasts.

Greater China remained Apple's third-largest regional market. Revenue from the region, which includes mainland China, Hong Kong, and Taiwan, rose 22% to $18.82 billion. The performance comes amid ongoing geopolitical tensions between Washington and Beijing that have created uncertainty for U.S. technology companies with significant Chinese manufacturing and consumer exposure.

Services and Margins Bolstered by Tariff Refunds

The services segment produced $30.74 billion, falling short of the $31.22 billion Wall Street target. Revenue from the division still grew 12% year-over-year, with Apple citing unfavorable foreign currency movements outside the United States as a drag on the total. The division saw increased income from advertising, the App Store, AppleCare, music, streaming video, cloud storage, and payment products. Services has become Apple's second-largest revenue category after iPhone and carries significantly higher margins than hardware, making it a key focus for investors evaluating the company's long-term profitability trajectory. Cook noted that Apple now has 1.5 billion paid subscriptions, a figure encompassing iCloud accounts and App Store subscriptions from which Apple collects a portion of each transaction.

Gross margin reached 50.1%, beating the 47.9% analysts had expected. Tariff-related refunds contributed approximately two percentage points, bringing the precise figure to a record 50.06%. Absent that benefit, the margin would have landed near the original Wall Street projection.

The refunds followed a U.S. Supreme Court ruling earlier this year that struck down certain tariffs imposed under the previous Trump administration. Under those emergency powers, Apple had been paying elevated import duties on both finished products and individual components brought into the country. The ruling affected multiple U.S. importers beyond Apple, though the company's scale made its refund particularly material to quarterly results.

Apple is also developing a redesigned Siri platform that incorporates technology from Alphabet's Google (NASDAQ: GOOGL, GOOG). The updated voice assistant is expected to debut alongside new iPhone hardware in September. Investors have scrutinized Apple's competitive standing in artificial intelligence as rivals accelerate their own AI product launches, including OpenAI's ChatGPT integration across devices, Google's Gemini assistant, and Microsoft's Copilot platform embedded in Windows and Office.

"Today, Apple is proud to report our strongest June quarter ever, with double-digit revenue growth across iPhone, Mac and Services, and in every geographic segment," Cook said. He also highlighted the Siri AI update, new software features, and child-protection tools unveiled at WWDC26.

CFO Kevan Parekh stated: "We are very pleased with our record business performance during the quarter, which set new June quarter records for both EPS and operating cash flow." Parekh added that Apple's active installed device base reached a new high across all major product categories and every region. The growing installed base is central to Apple's services strategy, as more devices in use translate to a larger addressable audience for subscriptions, App Store purchases, and accessories.

The call marked Cook's final earnings appearance before John Ternus assumes the role of chief executive. Ternus, a 25-year Apple veteran who currently leads the company's hardware engineering division, spoke only briefly during the call. The leadership transition represents one of the most closely watched executive changes in the technology sector, as Cook has led Apple since 2011 and oversaw its rise to becoming the first U.S. company to reach a $3 trillion market capitalization.