Apple reported a 16% increase in revenue for its fiscal Q3 2026, reaching $109.42 billion, surpassing expectations of $108.65 billion. Earnings per share rose 29% to $2.02, exceeding estimates of $1.89, aided by tariff refunds contributing about 11 cents to EPS. However, the company is grappling with significant memory price increases due to shortages, which affected its gross margins.
Although gross margins were reported at 50.1%, this figure included a 2 percentage point benefit from tariff refunds, suggesting underlying pressures on profitability. CEO Tim Cook acknowledged the ongoing memory pricing crisis, describing it as a '100-year flood,' and indicated that prices are expected to rise further.
Looking ahead, Apple anticipates a revenue growth of 9% to 11% for the September quarter, which is below the 12.1% growth expected by analysts. The company also expects supply constraints to worsen for its iPhone, Mac, and iPad products.
Despite these challenges, Apple has raised its price target from $300 to $340, reflecting confidence in its long-term growth potential, particularly with upcoming advancements in artificial intelligence and the anticipated iPhone 18 launch. Overall, while the current quarter showed strong performance, the memory crunch poses risks that investors should monitor closely