Apple's strongest June quarter ever, yet underlying concerns remain

On July 30 local time, Apple released its fiscal third-quarter results for fiscal year 2026 (ended June 27). This marked CEO Tim Cook’s final earnings call during his tenure, drawing significant attention.

All key performance metrics hit record highs. Apple reported revenue of $109.417 billion this quarter, up 16% year-over-year, setting a new record for a June quarter; net income reached $29.789 billion, up 27%; diluted earnings per share came in at $2.02, up 29%, including a one-time benefit of $0.11 from tariff refunds. Gross margin stood at 50.1%, with tariff refunds contributing approximately 2 percentage points. Operating cash flow also hit a new peak for a June quarter.

Hardware and services advanced in tandem, with growth across all regions. iPhone revenue reached USD 54.252 billion, surging 22% year-over-year and accounting for nearly half of total revenue—the highest for the period on record. Mac revenue hit USD 10.352 billion, soaring 29% year-over-year, driven by strong demand for the new M5 series that outstripped supply, while emerging markets posted record sales. Services revenue came in at USD 30.739 billion, up 12% year-over-year—marking a June-quarter high but falling short of market expectations. Wearables, Home, and Accessories revenue totaled USD 7.883 billion, rising modestly by 6.5%. iPad revenue was USD 6.191 billion, down approximately 6% year-over-year, making it the only hardware category to show weakness. Regionally, all five major markets posted positive growth: Greater China revenue reached USD 18.816 billion, up 22% year-over-year and setting a new record; the Americas, Europe, Japan, and Rest of Asia-Pacific grew by 11%, 22%, 13%, and 16%, respectively.

Concerns overshadowed the upbeat results. Apple’s guidance for the next fiscal quarter was notably conservative: it projected year-over-year revenue growth of just 9%–11%, below the market’s expectation of 12.1%; gross margin guidance was lowered to 47%–48%; and iPhone growth for the next quarter is expected to be around 15%. The reasons include worsening supply constraints—prices for advanced-node chips (Taiwan Semiconductor capacity) and DRAM memory continue to rise, and Tim Cook acknowledged that supply chain flexibility remains below normal levels. Additionally, the slowing pace of services growth has raised concerns.

As a result, Apple’s after-hours share price dropped more than 8% at one point, wiping out over USD 300 billion in market value in a single day. Overall, Apple delivered its strongest-ever June quarter, yet supply bottlenecks and weak forward guidance cast a shadow over this 'farewell earnings report.' $Apple (AAPL.US)$

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