Apple beats Q3 estimates but stock slides on weak guidance

Apple ↘ 0.80% reported its fiscal third-quarter 2026 results on Thursday, posting revenue of $109.42 billion — up 16% year over year — and earnings per share of $2.02, both exceeding Wall Street forecasts. Yet shares fell sharply in after-hours trading as investors zeroed in on shortfalls in the company's Services and Greater China businesses, along with guidance that trailed expectations.investing+1

The quarter was driven by record iPhone revenue of $54.25 billion, up 22%, and Mac revenue of $10.35 billion, up 29%, as consumers rushed to buy devices ahead of anticipated price increases tied to a global memory-chip shortage. EPS of $2.02 topped the $1.89 consensus, though $0.11 of that came from one-time tariff refunds stemming from a Supreme Court ruling earlier this year that struck down the White House's global tariff regime.reuters+1

Where Apple Fell Short

Services revenue grew 12% to $30.74 billion but missed analyst estimates near $31.2 billion, according to LSEG data. Greater China revenue of $18.82 billion, while up 22%, also came in below forecasts. Apple pointed to foreign-exchange headwinds as a factor in the Services miss.tradingkey+1

The company guided for September-quarter revenue growth of 9% to 11%, below the roughly 12% analysts had expected, and warned that supply constraints would "increase significantly" from the June quarter. Projected gross margins of 47% to 48% reflected continued pressure from rising memory costs.newsbytesapp+1

Supply Chain and Leadership Transition

CEO Tim Cook told Reuters Thomson Reuters Corporation ↗ 2.92% that the primary constraint during the quarter was an industry shortage of advanced chipmaking capacity used to produce Apple Silicon, particularly affecting Mac shipments. "The supply chain just fundamentally has less flexibility in it to meet the high levels of demand," Cook said.reuters

The earnings report is also Cook's last as chief executive. He is expected to hand the role to hardware chief John Ternus on September 1, after 15 years leading the company.businessinsider+1

Market Reaction

Shares closed at $333.43 before the report, then dropped in after-hours trading as investors weighed the softer guidance against a stock that had already rallied roughly 25% year to date. The selloff came after a July run that saw Apple reclaim its position as the world's most valuable company from Nvidia ↘ 1.47%, with investors treating the stock as a haven from AI-spending concerns gripping much of Big Tech.cnbc+2

R&D spending surged 32% to $11.7 billion, underscoring Apple's investment in its revamped Siri AI features and upcoming product roadmap — capabilities management expects to drive demand during the holiday season.investing+1