Apple Inc. (AAPL) shares rose on Friday after the tech giant reported third-quarter earnings that surpassed Wall Street expectations on both the top and bottom lines, fueled largely by stronger-than-expected iPhone sales. The company’s results reflect continued strength in key product categories as well as services, positioning Apple favorably despite a challenging global economic environment.
“Today Apple is proud to report a June quarter revenue record with double-digit growth in iPhone, Mac, and Services and growth around the world, in every geographic segment,” Apple CEO Tim Cook stated in a Thursday press release. This declaration underscores the broad-based momentum across Apple’s business units and geographies.
Following the earnings announcement, Apple’s stock gained approximately 1.8% in premarket trading, signaling investor optimism. The stock closed the regular session at $202.38 per share, down 2.5% on the day, before bouncing slightly in after-hours trading to $202.52.
For the third quarter, Apple delivered earnings per share (EPS) of $1.57 on revenue of $94 billion, beating Bloomberg consensus estimates which had forecast EPS of $1.43 and revenue of $89.22 billion. By comparison, in the same quarter last year, Apple posted EPS of $1.40 and revenue of $85.7 billion, indicating solid year-over-year growth.
Sales in China, a key market for Apple, came in at $15.3 billion, slightly surpassing Wall Street’s expectation of $15.1 billion. This represents an important milestone for the company as it navigates complex trade relations and supply chain issues in the region.
The iPhone, Apple’s flagship product, generated $44 billion in revenue during the quarter—well above the $39.8 billion analysts had anticipated. This strong performance was complemented by the Services segment, which reported revenue of $27.4 billion, exceeding expectations of $26.8 billion. Services, which includes the App Store, Apple Music, iCloud, and licensing, has become an increasingly significant driver of Apple’s overall profitability.
Mac revenue topped out at $8 billion, maintaining its steady contribution to the company’s earnings. However, revenue from iPad and Wearables showed a decline compared to the prior year, registering $6.5 billion and $7.4 billion, respectively.
Despite these strong results, Apple is facing several headwinds. Most notably, President Trump has threatened to impose a 25% tariff on imported iPhones unless Apple moves production to the United States. This looming tariff creates uncertainty over the company’s supply chain and cost structure.
Additionally, Apple could face repercussions from the ongoing antitrust lawsuit against Google. The $20 billion per year agreement between Apple and Google, which designates Google Search as the default search engine on Apple’s Safari browser and Siri, is under judicial scrutiny. The federal judge overseeing the case is expected to rule on the “remedies” phase of the trial in August, which could mandate Google to alter or abandon exclusivity agreements viewed as monopolistic.
Revenue derived from this deal falls under Apple’s Services segment, meaning any disruption could significantly impact this fast-growing business area. An unfavorable ruling could create a $20 billion revenue gap for Apple.
Apple is also grappling with criticism regarding its approach to artificial intelligence (AI). Wedbush analyst Dan Ives has publicly urged the company to acquire AI startup Perplexity AI (PEAI.PVT), highlighting the need for Apple to accelerate its AI initiatives.
“It’s time for Cook and Cupertino to face the new reality of this quickly morphing AI driven tech landscape … because if they do not change it will be a historic strategic black eye for Apple, in our view,” Ives wrote in an investor note ahead of the earnings report. His comments reflect concerns that Apple’s traditionally cautious approach to emerging technologies may cause it to lag behind competitors aggressively advancing in AI.
Similarly, Bank of America’s analyst Wamsi Mohan criticized Apple’s AI strategy, noting that while the company typically takes a measured approach when rolling out new technology, the rapid pace of AI innovation could leave it falling short of evolving user expectations. “Each keynote that goes by with Siri still doing relatively basic things while competitors’ assistants converse and create content is a hit to Apple’s reputation for innovation,” Mohan said in a Monday investor note.
As Apple continues to navigate these challenges and opportunities, investors will be watching closely to see how the company balances innovation with its strong hardware and services base moving forward.
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