Published on: 2026-07-31
Apple delivered its strongest June quarter on record, with revenue up 16% to $109.4 billion, earnings per share up 29% to $2.02 and iPhone revenue up 22%. Shares still fell roughly 6% by the end of the earnings call as Apple forecast slower September growth, lower underlying margins and tighter product supply.
The quarter was strong, yet doubts grew over how much of its growth and profitability could continue.
Apple earned $29.8 billion as revenue reached $109.4 billion, both ahead of Wall Street estimates.
Tariff refunds added $0.11 to EPS, leaving estimated EPS of $1.91 without the benefit against a $1.89 consensus.
September revenue growth is expected to slow to 9%–11%, below the roughly 12% Wall Street forecast.
Apple’s underlying gross-margin midpoint could fall from 48.1% in June to about 46.5% in September.
Services revenue rose 12% to $30.7 billion but missed the $31.4 billion consensus as iPhone and Mac sales surged.
Apple’s Mac revenue climbed 29% to a June-quarter record of $10.4 billion, while iPhone revenue reached a record $54.3 billion. The results confirmed that demand remained strong across Apple’s largest hardware categories.
Apple shares had already gained more than 20% during 2026 and were trading at a high earnings multiple. At that valuation, beating quarterly estimates was not enough. Investors also wanted stronger guidance or evidence that rising component costs would not reduce margins.
Apple reported a 50.1% gross margin and EPS of $2.02. Tariff refunds added approximately two percentage points to the margin and $0.11 to EPS. Excluding the benefit, estimated EPS was around $1.91, still above the $1.89 FactSet consensus and about 22% higher than a year earlier.
Apple remained ahead of expectations after removing the refund. The benefit amplified the reported EPS growth without accounting for the entire earnings surprise.
Apple’s reported gross margin reached 50.1% in June, helped by roughly two percentage points from tariff refunds. September guidance points to an underlying midpoint of about 46.5%, roughly 1.6 percentage points below the refund-adjusted June level.
Gross-margin measure |
June quarter |
September outlook |
Reported or guided margin |
50.1% |
47%–48% |
Estimated tariff benefit |
About 2 points |
About 1 point |
Approximate underlying margin |
48.1% |
46%–47% |
A 47%–48% reported margin remains exceptionally high, but the direction concerns investors. Margins are expected to fall as revenue growth slows to 9%–11%, below both June’s 16% growth and Wall Street’s roughly 12% forecast.
Apple’s CFO said higher memory costs more than explained the decline, partly offset by cheaper non-memory components, inventory and product mix.
Hardware supplied the quarter’s strongest growth. iPhone revenue rose 22%, and Mac revenue increased 29%. Services grew 12% to $30.7 billion, below the $31.4 billion Wall Street consensus and only slightly below the $31.0 billion reported in the March quarter.
The Services miss was modest, but it carried more weight because Services produces far more gross profit per dollar of revenue than hardware. Apple’s financial statements imply a Services gross margin of about 75.6%, compared with approximately 40.1% for products. Slower growth in the higher-margin business offers less protection as memory and semiconductor costs squeeze hardware profitability.
Apple expects underlying Services growth to remain broadly similar to June, although a further 2.5-percentage-point foreign-exchange headwind will reduce the reported growth rate. The business may continue growing without providing enough acceleration to offset the expected decline in hardware margins.
Apple said iPhone and Mac demand exceeded its own forecasts. Limited advanced-node semiconductor capacity restricted production during the June quarter, and management expects the constraints to increase significantly across the iPhone, Mac and iPad in September.
The shortage limits the number of devices Apple can ship. Rising memory prices simultaneously reduce the profit available from each completed product.
Apple has avoided matching the data-centre spending of Microsoft, Meta and Amazon, but it still depends on the same semiconductor supply chain. Apple did not attribute all of its higher memory costs to AI demand.
Apple beat expectations, but its September outlook pointed to slower growth, lower underlying margins and tighter supply. Those risks carried more weight because the stock had already priced in strong demand and durable profitability.
The after-hours decline deepened during the earnings call as management discussed memory costs, foreign exchange and worsening component shortages. Apple shares were down about 6.4% when the call ended, compared with a decline of roughly 2% shortly after the initial release.
No. Removing the $0.11 tariff benefit leaves estimated EPS of approximately $1.91, still above the $1.89 FactSet consensus. The refund increased the size of the beat rather than producing it.
Services revenue reached a June-quarter record of $30.7 billion but fell about $700 million below consensus. Management cited foreign-exchange pressure and softer mobile-gaming activity among the factors affecting growth.
Apple had raised prices on some Mac and iPad products before the earnings report, though no new iPhone increase was announced during the call. Higher prices could support margins, but they would also test how much of the current demand survives a more expensive upgrade cycle.
Management described the opposite problem. Demand for the iPhone and Mac exceeded Apple’s forecasts, while limited availability of advanced-node semiconductors restricted production. The shortage can still delay revenue and raise costs even with buyers waiting.
Apple’s June results showed that demand for the iPhone and Mac remained stronger than expected. The September quarter will reveal how much of that demand Apple can convert into profit as memory costs rise and supply constraints tighten.
Revenue growth, gross margin and Services growth will provide the clearest reading. They will show how well Apple protects profitability with less help from the tariff refund that strengthened the June figures.
The June quarter proved demand. The September quarter will test the margin behind it.
