Apple’s Record June Quarter Overshadowed by Supply Crunch Warning

Apple has reported its strongest June quarter on record, beating Wall Street expectations with $109.4 billion in revenue, but a warning over significant supply constraints and sharply rising memory costs sent its shares down more than 6% in extended trading.

The results, announced on Thursday 30 July, cover Apple’s fiscal third quarter, which ended on 27 June. Revenue rose 16% from $94 billion in the same period a year earlier, while net income reached $29.8 billion. Diluted earnings per share climbed 29% year on year to $2.02, ahead of the $1.88 consensus estimate.

It marks Apple’s 13th consecutive quarter beating both revenue and earnings expectations, a run stretching back to the quarter ended in December 2022. Yet investors focused on the company’s outlook for the current September quarter, where Apple expects growth to slow materially as component supplies tighten.

iPhone and Mac lead a record quarter

iPhone remained the largest contributor to Apple’s growth. Revenue from the handset reached $54.25 billion, up 22% year on year and above the $53.86 billion analysts had expected. Apple said demand for the iPhone 17 family and market-share gains drove the June-quarter record.

Mac was another standout. Revenue rose 29% year on year to a June-quarter record of $10.35 billion, comfortably ahead of an $8.74 billion estimate. Apple credited demand for MacBook Neo and MacBook Pro, adding that it saw all-time records for upgraders and new Mac customers.

Tim Cook said in Apple’s earnings release: “Today, Apple is proud to report our strongest June quarter ever, with double-digit revenue growth across iPhone, Mac and Services, and in every geographic segment. At WWDC26, we were thrilled to introduce the all-new Siri AI, alongside all of Apple's latest software innovations and important new child safety features.”

Not every line of the business cleared expectations. iPad revenue was $6.19 billion, below the $6.92 billion analysts had forecast. Wearables, Home and Accessories delivered $7.88 billion, while Services brought in a record $30.74 billion.

Services still grew 12.1% from a year earlier, but that was slower than the 16.3% growth recorded in Apple’s previous quarter and below the $31.22 billion analysts had expected. The division includes iCloud, Apple Music and App Store fees, making its slower growth a notable blemish in an otherwise strong report.

China misses and memory pressure cloud the outlook

Sales in Greater China also disappointed relative to forecasts. Revenue in the region rose 22.4% year on year to $18.86 billion, but fell short of the roughly $19.6 billion consensus estimate. That came despite Counterpoint Research data showing Apple outperforming the broader Chinese smartphone market on shipments in the second quarter of 2026.

The more serious issue is Apple’s supply outlook. The company expects September-quarter revenue growth of 9% to 11% year on year, below the 12% analysts had modelled. Apple cited significant constraints affecting iPhone, Mac and iPad, alongside a 2.5 percentage-point foreign-exchange headwind.

Cook told analysts that Apple was facing “some very significant (supply) constraints currently with limited flexibility in the supply chain to remedy it”. The core problem is a shortage of advanced chipmaking capacity used for Apple’s system-on-chip designs, particularly affecting the Mac range.

Demand has exceeded Apple’s expectations, but the company has limited room to increase supply quickly. Cook said Apple was evaluating alternative sources of memory chips, as memory prices continue to climb.

“We reluctantly raised prices,” Cook said. “I would say we did it because we're in what I would characterize as a 100-year flood on memory pricing, with exponential increases in memory prices.”

Apple has already discontinued several high-memory Mac Studio configurations because of the constraints. It also warned in June that it needed to start increasing prices on a number of products, including iPad and Mac models.

Margins set to fall despite tariff refunds

Apple’s gross margin reached 50.1% in the June quarter, helped by tariff refunds worth around two percentage points. Those refunds also added about $0.11 to diluted earnings per share.

For the September quarter, however, Apple expects gross margin of 47% to 48%, even with a one-point benefit from tariff refunds. Rising memory costs are the main reason for that expected decline. Operating expenses are forecast to land between $19.1 billion and $19.4 billion.

The memory shortage began in 2024, but differs from the pandemic-era chip crunch. Manufacturing capacity has been redirected towards higher-margin artificial-intelligence infrastructure, creating scarcity in consumer and enterprise memory markets. DRAM allocated to AI data centres is consuming roughly 70% of memory-chip production in 2026, while TSMC capacity constraints add further pressure.

A changing of the guard approaches

The quarter is Cook’s last as Apple chief executive. On 1 September, he will become executive chairman, while hardware engineering chief John Ternus takes over as Apple’s eighth CEO. Cook has held the top job since succeeding Steve Jobs in 2011.

Ternus joined the earnings call but offered little detail when questioned about Apple’s AI plans, saying only that “there is so much opportunity” for Apple in the area. Johny Srouji will become chief hardware officer in an expanded role, leading both hardware technologies and hardware engineering.

For Apple, the next quarter will test whether it can turn exceptional demand into sales while navigating one of the industry’s most difficult component environments. For Ternus, it will also provide an immediate measure of how smoothly Apple can manage its supply chain during a major leadership transition.