Apple delivered stronger-than-expected fiscal third-quarter results, beating Wall Street estimates on both revenue and earnings per share.

However, the stock fell in after-hours trading as investors looked beyond the headline beat, focusing instead on weaker-than-expected Services and Greater China revenue, along with one-time tariff refunds that boosted profitability.

Apple Delivers Record Quarter but Shares Slip

Apple reported fiscal third-quarter revenue of $109.42 billion, surpassing analysts’ expectations of $108.65 billion. Diluted earnings per share came in at $2.02, comfortably above the consensus estimate of $1.89.

The company described the period as its strongest June quarter ever, driven by double-digit growth across iPhone, Mac, and Services. Revenue increased 16% year over year, while net income rose to $29.79 billion.

Despite the earnings beat, Apple shares fell more than 4% in after-hours trading, suggesting investors had already priced in strong results after the stock’s rally this year.

Mac and iPhone Drive the Earnings Beat

The standout performer was Apple’s Mac business.

Mac revenue climbed to $10.35 billion, far exceeding expectations of roughly $8.74 billion and marking a 29% year-over-year increase.

iPhone revenue also topped forecasts, reaching $54.25 billion, compared with expectations near $53.86 billion. The result represented a 22% annual increase, highlighting resilient demand ahead of Apple’s next iPhone launch.

Meanwhile, Wearables, Home and Accessories generated $7.88 billion, broadly matching analyst expectations.

Services and China Temper Investor Optimism

While Apple’s headline numbers impressed, investors focused on two notable misses.

Services revenue totaled $30.74 billion, falling short of Wall Street expectations of approximately $31.22 billion, although the segment still grew 12% year over year.

Greater China revenue reached $18.82 billion, below analyst forecasts of $19.67 billion, even as sales in the region increased 22% annually.

Apple also reported iPad revenue of $6.19 billion, down 6% from a year earlier.

The mixed segment performance raised questions about whether Apple’s fastest-growing, highest-margin businesses can continue delivering the pace of growth investors have come to expect.

Tariff Refunds Boost Margins

Apple’s profitability also benefited from a one-time tailwind.

Gross margin reached 50.1%, well above expectations of 47.9%, aided by roughly two percentage points from tariff refunds. The company also disclosed that earnings per share included an approximately $0.11 favorable impact from those refunds.

While the refunds strengthened quarterly results, investors appeared to discount part of the earnings beat because it was not driven entirely by core operations.

What’s Next?

Attention now shifts to Apple’s earnings call, where investors will look for updates on artificial intelligence initiatives, supply chain conditions, pricing strategy, and demand heading into the September product cycle. The market will also closely watch commentary from incoming CEO John Ternus, whose leadership begins in September, as Apple navigates growing competition in AI and ongoing supply constraints.

Source: BeInCrypto