Apple earnings takeaways: Weak forecast, supply concerns overshadow sales beat in Cook's last report as CEO

This is CNBC's live coverage of Apple's 2026 third-quarter earnings.

Apple reported stronger-than-expected earnings and revenue for the fiscal third quarter, driven by a 22% increase in iPhone sales. But the company issued weak guidance for the current period, citing "supply constraints." The stock slid more than 6% in extended trading.

Here's how the company did versus LSEG consensus estimates:Â

Here's how Apple did in other key areas:Â

Net income climbed to $29.79 billion, or $2.02 per share, from $23.43 billion, or $1.57 per share, a year ago. Apple said earnings included 11 cents per share from tariff rebates. Â

Apple is reckoning with a global memory crunch, or what Cook recently called a "hundred-year flood," and a rush for chip manufacturing capacity that's already forced the company to lift prices on Macs and iPads. Apple hasn't said it will raise prices on iPhones, but many analysts are expecting hikes as soon as this year.

Meanwhile, Apple is gearing up for a launch of a redesigned Siri using Google technology alongside new iPhone hardware in September, a critical test for the company as investors worry that it's fallen behind in artificial intelligence.

Revenue growth in the quarter topped 15% for a third straight period.

It was CEO Tim Cook's last earnings call before handing leadership over to John Ternus, a 25-year Apple veteran and the current head of hardware. Ternus said little on the call.

CNBC's reporters are covering Apple earnings from bureaus in San Francisco and Englewood Cliffs, New Jersey.

Correction: A prior version of this story had an incorrect figure for year-ago earnings.

After offering soft guidance related to "supply constraints" for parts, Cook explained how Apple is grappling with rising memory costs. It's paying more, and has done so for each of the past three quarters.

"We expect to pay even higher memory costs," Cook said.

Some of that will be offset by the inventory Apple has been holding and by expected savings on non-memory components.

But Cook doesn't see an end in sight, and said the market should expand beyond its three primary suppliers.

"If you look beyond September, we see the market pricing for memory continuing to increase, which could drive an increasing impact on our business," Cook said.

Incoming CEO John Ternus didn't intitially speak on Cook's last earnings call.

"The transition is going seamlessly, and I am beyond excited for John to step into his new role and lead Apple into its next era," Cook said on call.

"John will lead these calls going forward," Cook added. Ternus is set to take over on Sept. 1, with Cook becoming executive chairman.

When asked a question later on the call, Ternus said, "There is so much opportunity for us with everything that's happening in this space, and we're just really focused on on our plans and very excited about it."

Apple said revenue growth in the current quarter will be between 9% and 11%, missing analysts' expectations for expansion of 12%, according to LSEG.

CFO Kevan Parekh said the company continues to see "high levels of demand" for iPhones, with expected sales up in the mid-teens on an annual basis.

"However, we do expect iPhone revenue to be impacted by these foreign exchange headwinds and supply constraints," Parekh said.

Apple said it's expecting the foreign exchange piece to hurt growth by 2.5 percentage points in the fiscal fourth quarter. The company said its gross margin will be between 47% and 48%.

Mac sales surged nearly 29% to $10.35 billion, which Cook attributed to strong performance for the MacBook Neo, the low-cost laptop based around an iPhone chip that was introduced in March, before the quarter started. Apple also said strong MacBook Pro sales contributed to the surge. Â

Apple hiked prices on the Mac at the end of the quarter, including the MacBook Neo, due to a supply crunch for memory and other parts including processor manufacturing capacity. Cook said that he would talk about the supply crunch on a call with analysts, but he said it was a "difficult situation."Â

Apple hiked Mac and iPad prices in June, but hasn't done the same yet with iPhones in most markets. Cook told CNBC the situation is "difficult" and "not good for the consumer."Â

"Obviously, the memory prices are choking, and so we'll have to look at alternatives," Cook said.Â

Apple said tariff refunds added 11 cents to earnings per share, a nice boost for a company that was hit particularly hard by President Donald Trump's levies.

Rebates from U.S. tariffs accounted for two percentage points of additional gross margin, bringing the total margin to a record 50.06%.Â

Some of Trump's tariffs were struck down by the Supreme Court earlier this year, allowing companies to seek refunds. Apple was originally hit by higher import fees on finished products and components stemming from the emergency powers act.

Without the rebates, Apple's margin was about in line with estimates.

Revenue in the China region, Apple's third-biggest market, climbed 22% to $18.82 billion. For Apple, the area includes China, Hong Kong and Taiwan.

"That was driven by iPhone, which had a June quarter record in Greater China, and the Mac, which has had our best quarter in the history of the company in Greater China during the quarter," Cook told CNBC.

Apple's top market is the Americas, followed by Europe. Â Â

Apple's iPad sales declined 6% on an annual basis. The company blamed the weakness on a difficult comparison to last year's quarter, when sales of the devices surged due to a new low-cost iPad.Â

Revenue in the company's wearables and home category increased 6% on an annual basis to $4.9 billion, topping estimates.

Apple's services division, which delivers hefty margins, continued its steady growth, posting a revenue increase of 12% during the quarter to over $30 billion, although it missed analyst estimates. Apple said the services performance was hurt by foreign exchange headwinds. Â

Apple highlighted growth from advertising, App Store, AppleCare warranties, music, video, cloud services, and payment services. Â

Cook said Apple has 1.5 billion paid subscriptions, which includes iCloud as well as app subscriptions in the App Store for which Apple takes a cut. Â

Mac sales jumped nearly 29% to $10.35 billion, which Cook attributed to strong performance for the MacBook Neo, the low-cost laptop based around an iPhone chip that was introduced in March, before the quarter started. Apple also said strong MacBook Pro sales contributed to the surge. Â

As the quarter ended, Apple hiked prices on Macs, including the MacBook Neo, due to a supply crunch for memory and other parts like processor manufacturing capacity. Cook said he'll talk about the supply crunch on the earnings call, but he said it was a "difficult situation."Â

Apple's iPhone sales rose nearly 22% on an annual basis to $54.25 billion. That topped analyst estimates and represents huge growth as the iPhone 17 cycle matures ahead of an expected hardware launch in September.Â

In an interview with CNBC's MacKenzie Sigalos, Cook said the strength was tied to the iPhone 17, calling the sales figure an "incredible blowout." He added that the company was seeing "upgraders," or customers replacing their iPhones with new ones, "out in full force" during the quarter. Â

 "We just had significant momentum on the iPhone really since the launch," Cook said. Â

Apple shares traded lower heading into the third-quarter print.

The stock was fell 1.4% for the day to close at $333.43. It's the second straight day of slippage after the stock hit a record on Tuesday, when the company briefly crossed the $5 trillion market cap milestone for the first time.

Even with the drop, Apple shares are up about 23% for the year.

Apple has topped revenue and earnings estimates for 13 straight quarters, dating back to the period ended December 2022.

When the company last missed expectations, overall sales for the holiday quarter dropped 5%, the first year-over-year decline since 2019.

Cook said at the time that three factors hurt the results: a strong dollar, production issues in China affecting the iPhone 14 Pro and iPhone 14 Pro Max, and the overall macroeconomic environment.Â

"On the third factor, I would say was just the challenging macroeconomic environment, and you're hearing that from, I would think, everybody," Cook said in an interview.

So far this year, Apple has been doing well in greater China, which includes mainland China, Taiwan, and Hong Kong. Sales in the first half of the year grew in the region by 33%, and Cook said on the last earnings call that he was "thrilled" with the performance.

Apple is winning in China as the memory shortage has jacked up device prices across the board, leading the overall market to atrophy. In the second quarter, smartphone shipments declined 4.3%, the fifth straight quarterly drop, according to IDC.

Apple has yet to raise iPhone prices in China, allowing it to take market share. the company gained four percentage points "of market share in China year-over-year (18% of total China market shipments in 2Q26) where competitors Samsung, Xiaomi, Vivo, and Oppo have raised prices this year," analysts at Goldman wrote this week.

Analysts polled by FactSet are expecting 22% growth in China sales during the quarter to $18.77 billion,

Apple's gross margin will come into focus on Thursday as investors look to see how the company is grappling with rising costs for memory and other parts for its devices, a dynamic that Cook called "unsustainable" in June. Apple's Android rivals are already seeing their margins suffer.

Prices on Macs and iPads went up at the end of June, just before the quarter ended, so the impact of the those hikes won't be seen until the company's September quarter results.

Apple's margin has expanded in recent years, hitting a peak of 49.3% in the March quarter. But the company's gross margin on its devices was only 38.7%, which was down 200 basis points, or 2 percentage points, from the previous quarter.

And Apple forecast that gross margin in the June quarter would decline, to between 47.5% and 48.5%. Analysts polled by StreetAccount are expecting exactly 48%.

Along with Apple, Amazon is scheduled to report after the bell on Thursday, bringing an end to earnings season for the megacap tech companies, as Nvidia's report comes later.

It's been a mixed bag so far as investors scrutinize capex commentary and start holding companies more accountable for converting expenses to revenue. Meta and Microsoft traded in opposite directions on Thursday, with investors still skeptical of Mark Zuckerberg's spending plans, while Microsoft gets applauded for its cloud growth.

Amazon's cloud business will be of particular interest to Wall Street, following results from rivals Alphabet and Microsoft.

Looking ahead to the rest of this year and into 2027, growth rates are projected to slow significantly. Consensus expectations for revenue expansion in the fiscal fourth quarter at are about 12%, and that number drops into the single digits for most of next year, according to FactSet.

For investors, those types of numbers look familiar. Prior to the December quarter, Apple hadn't notched double-digit revenue growth since 2021.

Apple typically issues revenue guidance on its earnings call.

On Monday, Cook and Ternus attended the premiere of Apple TV's "Ted Lasso" Season 4 in Los Angeles.

Apple TV is part of the company's services division. Analysts polled by StreetAccount expect Apple to report $31.36 billion in services revenue in the June quarter.

Apple's services haven't been immune to price increases in the U.S. The company raised its music subscription price from $10.99 to $11.99 per month in July.

Apple has yet to raise iPhone prices in most markets, which could threaten its margins as costs for memory, storage, and other parts rise.

But some analysts see Apple picking up share in a dismal smartphone market, potentially the softest since 2013. While Apple is large enough to negotiate large memory supply agreements and take the hit as prices rise, most Android phone makers don't have that luxury and have to pass costs on, potentially losing customers.

Apple could signal "market share gains given pricing increases at competitors," Goldman Sachs analysts, who have a buy rating on the stock, wrote in a note this week.

Apple most likely won't announced price hikes on an earnings call, but management often gives data points about "switchers" — people who moved from an Android to an iPhone.

Instead of spending hundreds of billions of dollars on AI infrastructure to build and serve advanced models, Apple announced earlier this year that it would license much of its AI technology from Google as well as using its cloud.

Apple's peers in the hyperscaler world are spending over $100 billion in capex this year, yet Apple is expected to spend just over $11 billion, with $3.4 billion in the June quarter.

In recent weeks, Apple's stock has climbed as many of the names associated with the AI buildout have faltered.

"While Apple was initially bruised by many investors for not joining the LLM investment cycle, investors are coming around to Apple's industry-leading" free cash flow, analysts at Baird wrote this month. They recommend buying the stock.