Apple reported fiscal Q3 revenue of $109.42 billion, up 16% year-over-year, beating expectations, but issued a weaker-than-expected September quarter outlook as rising memory costs accelerate and CEO Tim Cook prepares to hand the reins to John Ternus.
Apple reported fiscal third-quarter revenue of $109.42 billion, a 16% year-over-year increase that edged past analyst expectations of $108.65 billion, according to LSEG — but a darkening outlook on memory prices sent shares down nearly 6% in after-hours trading.
Earnings per share rose 29% to $2.02, also ahead of the LSEG consensus estimate of $1.89. However, tariff refunds contributed approximately 11 cents to that figure. Stripping out that benefit, earnings still exceeded expectations by 2 cents.
The quarter's results were shadowed by an accelerating memory shortage that Apple's outgoing chief executive Tim Cook described on the post-earnings call as a "100-year flood on the memory pricing." Cook acknowledged the quarter did exceed expectations "despite supply constraints and sequential foreign exchange headwinds."
Memory costs rose sequentially from the December quarter to the March quarter, and again through the June quarter. The company said it expects to pay still-higher prices going forward. "If you look beyond September, we see the market pricing for memory continuing to increase," Cook said.
Gross margin for the quarter came in at 50.1%, better than analyst expectations and higher than a year earlier. But management disclosed that result included a roughly 2 percentage point benefit from tariff refunds. Excluding that benefit, the Products segment gross margin stood at approximately 38.1% — better than the 36.7% the Street had anticipated, but not enough to offset a miss in the Services segment. The Services segment gross margin came in at 75.6%, roughly flat year-over-year but down sequentially due to product mix.
For the September quarter, Apple guided revenue growth of 9% to 11% versus the year-ago period, below the 12.1% growth analysts were expecting, according to FactSet. That forecast carries a 2.5 percentage point foreign exchange headwind. Using the midpoint of the range, the implied revenue figure is approximately $112.7 billion, below the LSEG consensus of $114.84 billion.
Apple also warned that "supply constraints" for iPhone, Mac, and iPad are expected to "increase significantly sequentially" in the current quarter. Companywide gross margin for the September quarter is projected between 47% and 48%, which includes a 1 percentage point benefit from tariff refunds.
On June 25, ahead of the earnings report, Apple announced larger-than-expected price increases on MacBooks and iPads in response to rising memory costs — moves that initially weighed on the stock before shares recovered to record highs. Apple briefly became the second U.S. company to reach a market value exceeding $5 trillion before Thursday's after-hours decline.
Two significant transitions are approaching. On September 1, Cook will step back into an executive chairman role, handing the CEO position to John Ternus. September also marks Apple's annual iPhone launch, at which point the company may signal whether the flagship device will follow MacBooks and iPads with a price increase.
On the artificial intelligence front, Cook said, "We're excited about the work we're doing on the next generation of Apple Intelligence, including Siri AI and the AI features we're developing across our platforms." At its Worldwide Developers Conference, Apple announced a broad AI overhaul that includes integrating Google's Gemini model into a redesigned conversational Siri alongside expanded in-house AI capabilities.
The extent to which those AI features drive upgrades of the anticipated iPhone 18 lineup — expected this fall — will be closely watched, reinforcing that the memory crunch, the CEO transition, and the AI product cycle are converging at a pivotal moment for the company.
Sara Montes de Oca is the Editor in Chief of TechEchelon. Previously a correspondent and producer in Washington, D.C., covering business, finance, and politics.
More from Sara →Amazon shares surged 12% in premarket trading Friday after AWS posted its strongest revenue growth since 2021, while Apple dropped 7% on guidance that missed analyst expectations due to memory shortages and chip supply constraints.
Amazon disclosed it collected $600 million in tariff refunds during the second quarter after the Supreme Court struck down many of Trump's trade levies, and said it plans to return some of the funds directly to affected customers.
Microsoft shares jumped 9% in premarket trading after Azure grew 43% and Copilot seats topped 30 million, while Meta fell 9% on a revenue guidance miss and a 91% plunge in free cash flow — the starkest earnings split between two major AI investors yet in 2026.
Written for readers who already know the basics — markets, AI, and the policy decisions that shape both.