Apple Inc. reported fiscal fourth-quarter revenue and earnings that surpassed analyst expectations, driven by stronger-than-anticipated iPhone and Mac sales. The company posted revenue of $114.5 billion, a 12% increase from $102.5 billion in the same period last year. Earnings per share came in at $2.10, including a five-cent benefit from tariff refunds. Analysts had projected revenue of $113.4 billion and EPS of $1.99, according to FactSet.
The results mark the first quarterly report under new Chief Executive John Ternus, who succeeded Tim Cook on September 1. Investors are now scrutinizing the company's holiday outlook, particularly amid higher device prices and ongoing supply chain disruptions.
iPhone revenue beats estimates despite supply constraints
iPhone revenue reached $57.58 billion, exceeding the $56.54 billion expected by analysts, according to LSEG data. However, this figure includes only eight days of sales from the new iPhone 18 Pro models, as the foldable iPhone Duo was not available until after the quarter ended. Despite a challenging environment for smartphone manufacturers, Apple's performance remained robust.
A global shortage of memory chips and other components has pushed up production costs, prompting Apple to increase iPhone prices by $100. This price adjustment is part of a broader increase across Apple's device lineup that began in late June. Chief Financial Officer Kevan Parekh noted that supply-chain constraints limited the company's ability to meet demand in China, where sales reached $17.5 billion—up about 20% year-over-year but below the $18.9 billion analysts had expected.
The supply shortage has affected the wider smartphone market, with global shipments declining 20% in the third quarter, according to Counterpoint Research. Apple, however, increased its market share from 18% to 22%, partly benefiting from stronger demand for its premium devices.
Apple's capital expenditure totaled $2.24 billion during the quarter, below LSEG's estimate of $3.33 billion. This continues the company's trend of investing lightly compared to other mega-cap tech peers that are pouring capital into AI infrastructure.
Mac and services revenue support quarterly performance
Apple also reported stronger-than-expected Mac sales, with revenue reaching $10.8 billion—approximately $1 billion above Wall Street forecasts. Services revenue, which includes the App Store, Apple Pay, and iCloud, totaled $31.6 billion. Net income came in at $30.7 billion, and the company's gross margin was 47.9%, within its previously provided forecast range of 47% to 48%.
Apple's results come amid a broader retreat in technology stocks, following disappointing earnings from several major tech companies and concerns about the scale of spending on artificial intelligence infrastructure. Unlike some of its peers, Apple has not committed to a comparable large-scale data-center investment program, which has helped distinguish its business from companies facing questions about returns on AI spending. However, Apple remains exposed to semiconductor supply constraints affecting the wider technology industry, particularly the rising cost and limited availability of memory chips.
Holiday outlook and iPhone Duo delays remain in focus
Investors are closely watching Apple's outlook for the holiday season, which is typically discussed during the earnings call following the results. The company faces several uncertainties, including higher prices, component shortages, and delays affecting the iPhone Duo. The foldable device has experienced extended delivery times, alongside reports of screen cracks. Apple has said the issues have affected only a limited number of devices.
The company also delayed the launch of the cheaper base iPhone 18 model until next year, complicating comparisons with previous product cycles. Parekh said it was difficult to determine how much of the stronger iPhone performance reflected customers purchasing devices ahead of anticipated price increases.
This article is for informational purposes only and does not constitute financial advice.
