NEW YORK, July 31, 2026, 05:13 EDT — U.S. stocks are trading in premarket hours, ahead of the main session’s 09:30 EDT opening.
- Apple stock dropped 7.3% before the market opened, threatening $361.6 billion in market capitalization.
- Revenue increased by 16.4%, while guidance for the September quarter fell short of Wall Street expectations.
- Preliminary earnings per share, adjusted for refunds, came in at approximately $1.91, exceeding the consensus estimate by two cents.
Apple Inc. NASDAQ:AAPL shares lost 7.3% in pre-market trading on Friday. Despite posting record quarterly revenue, investors concentrated on the company’s increasing supply constraints. The slide could wipe out roughly $361.6 billion in market capitalization.
The underlying earnings outperformed by a narrower margin. Apple reported that tariff refunds contributed $0.11 per share to earnings. Gross margin was also increased by roughly two percentage points as a result.
A provisional calculation indicates that refund-adjusted EPS stands at approximately $1.91, compared to the $1.89 anticipated by Wall Street. Thus, the refund accounted for about 85% of the EPS surprise reported by Apple.
| Measure | Reported | Ex-refund or underlying | Wall Street |
|---|---|---|---|
| Diluted EPS | $2.02 | $1.91 | $1.89 |
| EPS surprise | $0.13 | $0.02 | — |
| Gross margin | 50.1% | 48.1% | 47.92% |
Initial estimates account for Apple’s reported refund effects. The revised gross margin was marginally higher than anticipated.
Apple reported robust results for the quarter. Revenue climbed 16.4% to reach $109.42 billion, while net income jumped 27% to $29.79 billion. Tim Cook described the performance as Apple’s “strongest June quarter ever.” SEC
The iPhone accounted for almost 63% of Apple’s extra yearly revenue, while services made up an additional 22%.
| Business line | Q3 revenue | Year-on-year change | Share of total dollar growth |
|---|---|---|---|
| iPhone | $54.25 billion | up 21.7% | 62.9% |
| Services | $30.74 billion | rising 12.1% | 21.6% |
| Mac | $10.35 billion | up 28.7% | 15.0% |
| Wearables, Home and Accessories | $7.88 billion | increased 6.5% | 3.1% |
| iPad | $6.19 billion | down 5.9% | -2.5% |
Initial contribution figures are based on stated category revenue. Percentages sum to about 100% once rounded.
That combination raises a caution. Services revenue came in below the $31.22 billion forecast from analysts. Growth decelerated as well compared to the 16.3% in the prior quarter. Evercore ISI analyst Amit Daryanani said, “Slower App Store data continues to be an investor concern.” Reuters
The iPhone drove gains, with sales climbing 21.7% and topping the $53.86 billion forecast. Mac revenue also surpassed estimates by around $1.6 billion. In contrast, sales of iPad and in Greater China fell short of expectations.
The momentum was disrupted by the September forecast. Apple anticipated overall revenue to increase between 9% and 11%, while analysts on Wall Street had forecast roughly 12%.
| September-quarter measure | Apple outlook | Comparison | Preliminary midpoint gap |
|---|---|---|---|
| Total revenue growth | 9%-11% | Wall Street: about 12% | -2.0 points |
| iPhone revenue growth | Mid-teens | Wall Street: 17.6% | Roughly -2.6 points |
| Gross margin | 47%-48% | Q3 ex-refund: 48.1% | -0.6 points |
Midpoint differences represent calculated estimates.
Cook stated that Apple is experiencing “very significant” constraints alongside restricted supply-chain flexibility. He pointed to advanced chipmaking capacity as the primary obstacle. The shortages are impacting iPhones, Macs, and certain iPads. Reuters
Analysts at JPMorgan Chase & Co. NYSE:JPM, headed by Samik Chatterjee, said, “Demand robustness is running into a wall of supply and cost challenges.” They anticipate that constraints will delay certain sales instead of causing them to be lost. Reuters
Cash generation provides balance. Operating cash flow for the nine-month period increased by 43%, reaching close to $117 billion. Capital expenditures, calculated by property and equipment acquisitions, declined by 28%.
| Nine-month cash measure | FY2026 | FY2025 | Change |
|---|---|---|---|
| Operating cash flow | $117.0 billion | $81.8 billion | +43.1% |
| Purchases of property and equipment | $6.8 billion | $9.5 billion | -28.2% |
| Free cash flow | $110.2 billion | $72.3 billion | +52.5% |
| Free-cash-flow margin | 30.2% | 23.0% | +7.2 points |
Initial assessments measure free cash flow as operating cash flow less property and equipment acquisitions.
Anticipation was running high. As of Thursday, Apple had climbed roughly 3.6% across five trading days. It was still up 22.5% for 2026 after hitting an all-time high of $344.57 on Wednesday. The projected drop on Friday would offset the week’s earlier gains.
Focus in the coming week will be on updates to estimates and checks with suppliers. The upcoming set corporate event is Apple’s dividend record date, set for August 10. The company’s $0.27 quarterly dividend is payable on August 13.
Leadership changes introduce a new factor. On September 1, Cook will take on the role of executive chairman. John Ternus, currently head of hardware, will step in as chief executive on the same date.
Risks: Supply constraints may persist beyond Apple’s forecasts. Rising memory expenses or increased iPhone prices might dampen demand and squeeze margins. Services revenue is also under strain from changes in mobile gaming and App Store regulations.
Apple reported record demand and strong cash flow. However, investors are focused on sustainable earnings. The tariff refund was a one-off event.
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