Apple Inc. released its fiscal third-quarter earnings for the 2026 fiscal year on July 30, revealing that both revenue and net profit exceeded market expectations for the quarter. However, the stock tumbled approximately 7% in after-hours trading, driven by a combination of factors including a weaker-than-anticipated outlook for the fourth fiscal quarter and supply chain bottlenecks caused by a global surge in memory chip prices.
According to the report, Apple projects total revenue growth of 9% to 11% year-over-year for its fiscal fourth quarter ending in September. Based on the midpoint of this range, the projected revenue stands at around $113 billion, falling short of the $114.9 billion average forecast by Wall Street analysts. During the earnings call, Apple's management warned that component supply constraints would continue to limit production output across its hardware lines, including the iPhone, Mac, and iPad, during the fourth quarter.
Addressing the pressures on the supply chain and profit margins, Apple CEO Tim Cook noted that explosive demand for computing power from global AI data center construction has driven up prices for both dynamic random-access memory (DRAM) and NAND flash storage. This has led to an extreme rise in memory chip costs, creating severe cost and supply challenges. Additionally, headwinds from the foreign exchange market are expected to negatively impact revenue growth over the coming months.
Looking at the specific operational data for the fiscal third quarter, Apple generated total revenue of $109.4 billion, a 16% increase year-over-year. Quarterly earnings per share reached $2.02, surpassing the Wall Street analyst consensus of $1.89. The iPhone business was the standout performer for the quarter, posting revenue of $54.3 billion, up 22% year-over-year and exceeding the market's expectation of $53.6 billion. Fueled by new models such as the MacBook Neo and the M5-chip-powered MacBook Pro, Mac business revenue surged 29% year-over-year to $10.4 billion.
However, iPad business revenue for the quarter came in at $6.19 billion, missing the market forecast of $6.89 billion. Services revenue was $30.7 billion, also slightly below the anticipated $31.4 billion. Sales in Greater China totaled $18.8 billion, falling short of the $19.6 billion that was expected. This earnings report marks the final full fiscal quarter led by Tim Cook during his 15-year tenure as Apple's CEO. Starting September 1, John Ternus, Apple's senior vice president of Hardware Engineering, will officially succeed Cook as CEO. To accelerate the deployment of its generative AI strategy and enrich its next-generation hardware product lineup, Apple increased its research and development spending by a substantial 32% in the fiscal third quarter, reaching $11.7 billion.
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