Apple shares fell 6.3% in after-hours trading to $312.30 after the company forecast slower revenue growth, tighter supplies of advanced chips and rising memory costs for the September quarter, overshadowing stronger-than-expected results for the three months ended in June.
Apple guided for year-over-year revenue growth of 9% to 11% in the next quarter, below the roughly 12% growth expected in the consensus figures supplied with the results. Chief Executive Officer Tim Cook said foreign exchange rates would reduce reported revenue growth by about 2.5 percentage points sequentially, while shortages of advanced-node chips could affect iPhone, Mac and iPad availability.
The company also expects gross margin of 47% to 48% in the September quarter. That range includes about one percentage point of benefit from tariff refunds, putting the underlying outlook closer to 46% to 47%. The guidance points to a more difficult cost environment after a June quarter that benefited from an unusual refund-related lift to both earnings and margins.
Tariff refunds lifted June-quarter profitability
Apple reported fiscal third-quarter revenue of $109.42 billion, up 16.4% from a year earlier, while net income rose 27.1% to $29.79 billion. Diluted earnings per share reached $2.02, above the $1.88 consensus estimate provided with the results.
The reported earnings figure included a $0.11-per-share benefit from tariff refunds. Excluding that item, earnings would have been about $1.91 per share, leaving the company only modestly above the supplied consensus forecast.
Gross margin reached 50.1% during the quarter, aided by roughly two percentage points from the same tariff refund benefit. On an underlying basis, gross margin was about 48.1%, a level more consistent with Apple’s September-quarter forecast.
The distinction between reported and underlying margins helps explain the market’s reaction. Apple delivered strong sales and profits in the June quarter, but its guidance suggests that a favorable one-off item will fade as component costs rise and the company works through lower-cost inventory accumulated earlier in the year.
Apple generated $34.37 billion in operating cash flow and about $31.9 billion in free cash flow during the quarter. Research and development spending increased 32.3% year over year to $11.73 billion, reflecting the company’s continued spending on product engineering, chips, software and artificial intelligence-related features.
iPhone and Mac sales drove the upside
Product revenue increased 18.1% to $78.68 billion, exceeding the $77.25 billion consensus estimate supplied with the earnings figures. iPhone revenue rose 21.7% to $54.25 billion, above the expected $53.6 billion, providing the largest contribution to Apple’s quarterly growth.
Mac sales were another standout. Revenue from the segment climbed 28.7% to $10.35 billion, well ahead of the $8.62 billion estimate. The performance suggests demand for Apple’s personal computers remained firm through the quarter, though Cook’s warning about advanced-node chip constraints places the segment among the products that may face supply pressure in the months ahead.
iPad revenue moved in the opposite direction, falling 5.9% to $6.19 billion and missing the supplied $6.88 billion estimate. Wearables, home and accessories revenue grew 6.5% to $7.88 billion, broadly matching expectations.
Services revenue rose 12.1% to $30.74 billion but fell short of the $31.36 billion estimate. Services gross margin also declined by 1.1 percentage points sequentially to 75.6%. That remains far above Apple’s hardware margin, but the slower-than-expected services performance removed one potential cushion against cost pressure in devices.
Apple said paid subscriptions exceeded 1.5 billion and its active installed base passed 2.5 billion devices. Greater China revenue increased 22.4% to $18.82 billion, adding a strong regional result after periods in which the market had drawn close scrutiny from traders.
Memory inflation reaches consumer hardware
Cook said memory prices increased in the March quarter from the prior December quarter, rose again in the June quarter, and are expected to rise once more in the September period. Apple expects its inventory buffer of lower-cost components to diminish after September, exposing more of its product portfolio to current market prices.
Memory includes chips used to store data and run applications across smartphones, computers and servers. Rising prices can pressure device makers’ margins unless they negotiate better supply terms, redesign products, cut other costs or raise retail prices.
Apple said price declines in some non-memory components could offset part of the pressure. Yet the September-quarter margin outlook indicates those offsets may not fully compensate for higher memory and advanced-chip costs.
The supply challenge also reflects competition for leading-edge semiconductor production. Advanced-node chips are used in premium smartphones, computers and data-center systems, and supply constraints can limit the number of devices Apple can ship even when end-market demand remains healthy.
For cryptocurrency markets, the earnings release offers a narrower signal than claims of an immediate industry-wide disruption would suggest. Apple’s comments directly concern consumer electronics components and its own supply chain. They do not establish a near-term effect on Bitcoin mining economics, network operations or token valuations.
Hardware-intensive businesses, including mining operators, may nevertheless watch memory and semiconductor pricing closely. Their exposure varies widely depending on equipment contracts, electricity costs, fleet efficiency and the type of chips used in their machines. Companies built around proof-of-stake networks do not face the same direct dependence on mining hardware, but that difference alone does not determine how digital assets will trade.
Apple’s results instead show that demand for advanced computing capacity is beginning to feed through to a consumer hardware leader’s cost outlook. Strong iPhone and Mac sales gave the company a solid June quarter; the next test is whether it can protect margins and keep products available as its cheaper component inventory runs down.
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