Apple Exceeds Expectations with Strong iPhone and Mac Sales

Apple announced fiscal third-quarter results that surpassed Wall Street's projections, with significant growth in iPhone and Mac sales contributing to a 16.4% increase in revenue, reaching $109.42 billion.

This performance exceeded analyst estimates of a 15.5% rise to $108.65 billion and the company's own forecast of 14% to 17% growth. Apple's profits for the quarter, which ended June 27, were $2.02 per share, including 11 cents from US government tariff refunds. Even without these refunds, the per-share profit remained above the $1.89 estimated by analysts.

Despite the strong financial results, Apple shares experienced a 4% decline in after-hours trading. This dip follows a year where Apple's stock had already climbed more than 22%, allowing it to reclaim its position as the world's most valuable company, surpassing AI chip leader Nvidia.

The surge in iPhone sales, up 21.7% to $54.25 billion, marked a record for Apple's third quarter, a period typically characterized by slowing sales as consumers anticipate new model releases. This strong performance occurred even as a global shortage of memory chips prompted Apple to increase prices for Macs and iPads. Analysts anticipate that Apple may also raise iPhone prices at its upcoming September event.

Apple CEO Tim Cook cited an industry-wide shortage of advanced chipmaking technology for its Apple Silicon chips as the primary supply constraint during the quarter. This shortage particularly impacted the Mac lineup, which saw a 29% sales increase driven by the MacBook Neo and MacBook Pro, despite price hikes on these models. Cook explained that the company's product cycle has exceeded expectations, and the supply chain has limited flexibility in meeting this high demand.

Apple is also navigating supply chain pressures from substantial investments in AI data centers. The company has previously noted shortages of memory chips and main processors supplied by Taiwan Semiconductor Manufacturing Co.

Gross margins for the quarter stood at 50.1%, with tariff refunds accounting for two percentage points. Excluding these refunds, the gross margin was 48.1%, slightly above analyst expectations of 47.92% and the midpoint of Apple's guidance.

While other major tech companies have heavily invested in data centers, Apple has adopted a more cautious approach. However, the company has indicated potential future capital needs by revising its long-standing goal of returning all its cash to shareholders.

Sales of Macs surged by 28.7% to $10.35 billion, outperforming analyst estimates of $8.74 billion. In contrast, iPad sales decreased by 5.9% to $6.19 billion, falling short of expectations. Cook attributed the iPad decline to a difficult comparison with the previous year's quarter, which saw the introduction of a budget-friendly iPad.

The services segment, encompassing the App Store and iCloud, grew 12.1% to $30.74 billion, missing estimates of $31.22 billion. Wearable device sales rose 6.5% to $7.88 billion, slightly exceeding expectations.

Apple observed sales growth across all global regions, with revenue in Greater China increasing by 22.4% to $18.82 billion.