Apple Q3 Revenue Hits $109.4 Billion, Net Profit Up 27% — Yet Stock Falls 6% After Hours! Experts: Market Fears AI Is Hoarding Chip and Memory Capacity

Apple announced its fiscal 2026 third-quarter earnings on Thursday (30th), reporting revenue of $109.417 billion, a 16% year-over-year increase, and net profit of $29.789 billion, up 27%. Diluted EPS rose 29% to $2.02. iPhone revenue surged 22% to $54.252 billion, Mac revenue jumped 29% to $10.352 billion, and Greater China revenue rose 22% to $18.816 billion — all setting new records for the period. However, the stock dropped over 6% after hours, reflecting market concerns over next-quarter guidance and AI-driven competition for chip and memory capacity.

Apple forecasts Q4 revenue growth of 9–11%, below the market consensus of 12%. Gross margin guidance is set at 47%–48%. The current quarter’s 50.1% margin included approximately 2 percentage points from U.S. tariff refunds (adding $0.11 to EPS). Excluding this, the underlying margin is about 48.1%. Service revenue rose 12% to $30.739 billion, missing expectations and slightly below last quarter’s $30.976 billion. Growth was driven almost entirely by iPhone and Mac hardware; iPad revenue fell 5.9%, and wearables and accessories grew only 6.5% — indicating a lack of broad-based momentum.

In the first three quarters of fiscal 2026, Apple’s capital expenditure totaled $6.799 billion — far below the tens of billions spent by cloud providers on AI data centers. R&D spending reached $11.729 billion, focused on on-device chips and technologies. However, advanced process nodes, HBM, DDR5, and enterprise-grade NAND are being absorbed by AI infrastructure. TSMC’s CoWoS capacity and memory output from Micron and SK Hynix are fully booked, forcing Apple’s A-series, M-series, and LPDDR chips to compete in the same pool.

Apple CEO Tim Cook told Reuters the main bottleneck this quarter was "advanced processes required to produce chips." Mac sales rose nearly 30% despite price hikes, but production capacity hasn’t kept pace.

Experts note that Apple generated $116.996 billion in operating cash flow over the first three quarters of FY2026 and spent $62.094 billion on share buybacks — so cash isn’t the issue. The real challenge is whether Apple can secure enough chips and memory for its September product cycle. Apple has already adjusted prices for Mac and iPad, while iPhone prices remain unchanged. But if supply constraints persist, the Q4 iPhone growth forecast of "low teens" falls short of the market’s 17.6% expectation. With App Store regulatory headwinds weakening the service buffer, hardware shortages could directly erode revenue.

This marks Tim Cook’s final quarterly report as CEO, with John Ternus set to take over on September 1. The new leader’s first test isn’t AI models or Vision Pro — it’s the most fundamental supply chain challenge: how many new iPhones to build, whether to raise prices, and whether Mac delivery times can be reduced to under four weeks.

Apple’s product strength was validated in Q3. In September, the real test will be whether Apple can still deliver products on schedule as AI drains capacity across the entire supply chain.