Apple heads into earnings with record streak as $1.5 billion margin question looms

NEW YORK, July 30, 2026, 11:01 EDT

Apple Inc. NASDAQ:AAPL stock declined by 1.8% to $332.25 during late-morning trading on Thursday, while U.S. cash markets were open. The company is set to announce its fiscal third-quarter earnings after the market closes, with a conference call scheduled for 5 p.m. EDT.

The investor threshold remains under the revenue mark. Recent hikes in Mac and iPad prices are intended to counter increased memory expenses, but cannot reduce demand. Apple left iPhone prices the same.

Early consensus points to revenue around $108.7 billion. LSEG projects growth at 15.5% and anticipates a gross margin of 47.9%. This margin would be down from 49.3% recorded in March.

Fiscal-quarter measure	Q3 FY2026 preliminary	Q3 FY2025 actual	Q2 FY2026 actual
Revenue	$108.85 billion	$94.04 billion	$111.18 billion
Diluted EPS	$1.89	$1.57	$2.01
Gross margin	47.9%	46.5%	49.3%
Gross profit	$52.13 billion	$43.72 billion	$54.78 billion

Bloomberg consensus informs the preliminary column. Gross-margin percentages and corresponding comparisons reflect the reported data.

With projected sales, a margin of 47.9% yields about $52.1 billion in gross profit. Maintaining March’s margin instead would generate approximately $53.6 billion. The difference amounts to $1.50 billion.

Based on March’s diluted share count, that shortfall amounts to roughly $0.10 per share pre-tax. The consensus EPS stands at $1.89. Minor shortfalls have significance given this valuation.

Services provide the buffer, accounting for 27.9% of revenue in March and contributing 43.4% of gross profit. Apple’s data shows a Services margin of 76.7%, compared with 38.7% for Products.

Revenue category	Q3 FY2026 preliminary	Q3 FY2025 actual	Estimated growth	Estimated sales share
iPhone	$53.60 billion	$44.58 billion	20.2%	49.2%
Mac	$8.62 billion	$8.05 billion	7.1%	7.9%
iPad	$6.89 billion	$6.58 billion	4.7%	6.3%
Wearables, Home and Accessories	$7.87 billion	$7.40 billion	6.3%	7.2%
Services	$31.36 billion	$27.42 billion	14.4%	28.8%

The published estimate for the category stands at $108.34 billion, falling $510 million short of the projected total revenue. Growth rates and sales proportions have been determined.

The product lineup remains heavily weighted toward devices. The iPhone is projected to generate roughly 49% of total revenue. Services continues to account for less than 29%.

Analysts at Morgan Stanley NYSE:MS described the iPhone as Apple’s “most inelastic product.” They noted that recent price hikes are unlikely to significantly affect demand. Reuters

Should the Services margin remain steady, Bloomberg’s projections indicate a Products margin of 36.2%. This figure stands roughly 244 basis points lower than March. This reflects a scenario, not official company guidance.

Margin measure	March benchmark	Q3 estimate or scenario	Difference
Total gross margin	49.3%	47.9%	-140 basis points
Services gross margin	76.7%	76.7% assumed	—
Products gross margin	38.7%	36.2% implied	-244 basis points
Gross profit on Q3 sales	$53.63 billion at March margin	$52.13 billion	-$1.50 billion

The Products-margin scenario keeps Services margin unchanged from March. It uses Bloomberg projections alongside Apple’s disclosed March-quarter expenses.

Apple shares are currently valued at 40.2 times trailing earnings. The company briefly surpassed the $5 trillion mark on Tuesday, having risen roughly 25% since the start of the year. The rapid rally has left investors less accepting of softer forecasts.

Options implied an approximate 4% swing by Friday, equivalent to $13 per share or $196 billion in market capitalization. Over its past four earnings releases, Apple’s average post-earnings move was 1.7%.

Jefferies Financial Group NYSE:JEF analyst Edison Lee stated that “margin is on the downside.” His base target is $308.92, roughly 7% under the stock’s price as of late Thursday morning. Business Insider

Tim Cook’s last planned earnings call as CEO is set for 5 p.m. EDT. John Ternus will take over as chief executive on September 1. Cook will stay on as executive chairman.

Risks: Increased demand for iPhones may help counteract pressure on margins. However, higher component costs, supply shortages or delayed iPhone price hikes could have the opposite effect. Option prices are subject to rapid fluctuation.

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Further analysis

Editorial insight

What is causing Apple shares to decline ahead of earnings?

Apple shares hovered around $332 late Thursday morning, falling roughly 1.8%. The S&P 500 moved higher, with Apple lagging the broader index. The Wall Street Journal Despite Thursday’s pullback, shares had climbed about 24% in 2026. Barron’s The move may reflect pre-earnings caution, but there was no clear trigger.

Which earnings figures does Apple need to surpass this evening?

FactSet projects revenue near $109 billion and earnings of $1.89 per share. MarketWatch LSEG forecasts a similar figure, anticipating $108.65 billion in revenue. Reuters The same quarter a year ago saw Apple post $94.0 billion in revenue alongside $1.57 per share. Apple The company previously signaled revenue growth would range between 14% and 17%. Reuters However, a top-line beat may fall short for investors if the September-quarter guidance is not strong.

Does demand for the iPhone remain robust enough to fuel growth?

Analysts project iPhone revenue will increase roughly 21% from a year ago, bringing sales to around $53 billion to $54 billion. Reuters Counterpoint put shipment growth at only 3%, with market share nearing 20%. Reuters The discrepancy suggests a higher-value product mix and increased pricing drove gains. Planned price hikes in the next cycle may present a test for consumer demand.

Is Apple able to sustain its margins amid rising memory expenses?

Apple reported a 49.3% gross margin for the March quarter, surpassing analyst forecasts. The company projected its June-quarter margin to range from 47.5% to 48.5%. Reuters LSEG forecast 47.9%, citing increased costs for memory and components. Reuters Product margins came in at 38.7%, compared to 76.7% for Services. MarketWatch Margins continue to be the main variable for results.

Will China’s recovery prove lasting or short-lived?

Revenue from Greater China amounted to $20.50 billion in the last quarter, advancing 28%. Foreign-brand smartphone shipments in June increased 66.3%, despite an overall market decline of 15.3%. Reuters That data indicates ongoing momentum for iPhone in the quarter covered. Still, shipment figures include other non-domestic brands and are not equivalent to Apple’s reported revenue. Trends in China remain positive, but are not definitive.

Might Services balance weaker hardware expansion?

Services reported $30.98 billion in revenue for the last quarter, reflecting a 16% increase from a year earlier. The segment’s gross margin reached 76.7%, nearly double that of the products margin. MarketWatch Analysts expect Services revenue for the June quarter at between $31 billion and $32 billion. IG A growth rate of about 13% would represent a slowdown from the 16% shown in March. Services continue to be key for profit generation.

Could Apple benefit from lower AI investment at this stage?

Apple has recently seen support from investors for steering clear of extensive spending on data centers. Reuters Still, the company continues to push forward. Research and development spending hit $11.42 billion, marking a 34% increase from a year earlier. This investment appears in operating expenses instead of large-scale capital outlays. Whether this leads to quicker device refresh cycles remains an open question.

How significant is the leadership change at this moment?

Tim Cook is expected to host his last earnings call as Apple’s chief executive tonight. Barron’s John Ternus has been named to succeed him starting September 1. Apple In the short term, market reaction will focus on results and outlook. Over a longer period, investors will look closely at progress in AI, price strategy, and supply-chain management. A major change from Cook’s strategic direction could affect Apple’s valuation.

Is Apple shares’ current price considered too high?

Apple shares, at around $332, are valued at nearly 40 times trailing earnings. According to FactSet projections, the stock trades at approximately 38 times expected fiscal 2026 profits, dropping to roughly 34 times on fiscal 2027 estimates. The Wall Street Journal The average price target from FactSet is $325.41, a bit under the current share price, with individual analyst estimates ranging from $240 up to $400—a notably wide spread. The Wall Street Journal Apple’s recently announced $100 billion share buyback program accounts for just about 2% of its market capitalization. Apple

How is Apple stock expected to perform in the short term?

The consensus view calls for results close to $109 billion in revenue and $1.89 earnings per share. MarketWatch For the following quarter, Wall Street projects around $114.8 billion in revenue and $2.01 per share. Investor’s Business Daily Sustained gains in the stock would depend on improved guidance, higher margins, or accelerated Services growth. If margins fall short or China numbers disappoint, the premium valuation could be at risk. Analysts’ price targets cover a range from $240 to as high as $400, indicating limited strong conviction. The Wall Street Journal These are scenario outlines, not specific price forecasts.

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Khadija Saeed is a financial markets reporter at TS2.tech, specializing in stocks, technology and emerging industries. She studied economics and finance at the London School of Economics and previously worked in market research before moving into financial journalism. Her coverage focuses on the companies, innovations and economic trends influencing global investors. Follow Khadija Saeed on Google News.