Apple’s shares saw a sharp decline in extended trading on Thursday, as investors looked past record-breaking revenue to focus on underperformance in key sectors and a cautious forward-looking outlook. While the tech leader exceeded overall analyst projections for the period ending in June, shares dropped nearly 6% due to lackluster sales in China and a miss in the high-margin services category.
For the third fiscal quarter of 2026, the company recorded total revenue of $109.42 billion, representing a 16.4% increase over the previous year. Earnings per share reached $2.02, though a notable $0.11 of that figure was the result of non-operational tariff refunds. This financial boost comes as Donald Trump’s administration continues to oversee trade policies impacting global electronics manufacturing. Despite the bottom-line beat, the stock’s downward trajectory was fueled by guidance warning of “supply constraints” that could limit immediate growth.
Product performance remained uneven across the portfolio. The iPhone served as a primary growth engine, with sales climbing 21.7% to $54.25 billion. Conversely, the iPad division saw a 5.9% year-over-year contraction, and the Services segment—a critical area for recurring revenue—brought in $30.74 billion, failing to meet the $31.36 billion expected by the market. Geographically, the $18.82 billion generated in China fell nearly $760 million short of consensus estimates, highlighting ongoing difficulties in that territory.
Operations are currently being squeezed by what CEO Tim Cook called a “hundred-year flood” in the components market, as the global push for artificial intelligence infrastructure drives up the price of memory and storage. These expenses have already prompted price hikes for Mac and iPad hardware, with analysts anticipating similar increases for the next generation of iPhones. To counter these rising costs for consumers, the firm recently debuted “Apple Upgrade,” a leasing model designed to make its hardware more accessible.
This earnings report serves as the final chapter of Cook’s tenure as CEO, with hardware veteran John Ternus scheduled to assume the role on September 1. Ternus will take the helm just as the company prepares for a pivotal September launch featuring a Google-powered Siri AI overhaul. While management emphasized that their global device footprint has never been larger, the incoming leadership must navigate a landscape defined by significant manufacturing hurdles and shifting demand.
