SAN FRANCISCO — Apple once again demonstrated its ability to outperform Wall Street expectations. Yet the company’s quarterly results came with a warning that may prove more consequential than the numbers themselves.
Despite record iPhone sales and strong growth in its Mac business, Apple executives said shortages of components used to manufacture advanced chips have become the company’s primary obstacle to expanding product shipments.
As a result, Apple’s revenue forecast for the September quarter fell short of Wall Street expectations, sending the company’s shares down approximately 5.5% in after-hours trading.
Apple Forecasts Slower Revenue Growth
Chief Financial Officer Kevan Parekh said Apple expects revenue to increase between 9% and 11% in the current quarter, compared with Wall Street’s forecast of roughly 12%.
The company expects iPhone revenue to rise approximately 15%, below analysts’ projected growth of 17.6%. Apple also forecast a gross margin of between 47% and 48%.
Chief Executive Officer Tim Cook emphasized that the weaker outlook was not caused by declining customer demand.
“We are currently seeing very significant supply constraints and limited flexibility within the supply chain to address them,” Cook told analysts during the company’s earnings call.
According to Cook, the principal bottleneck involves limited access to the most advanced manufacturing technologies required to produce Apple-designed silicon chips.
The company is evaluating several ways to strengthen its supply chain, including the use of alternative suppliers for memory chips and other critical components.
Quarterly Results Exceed Expectations
Although Apple issued a cautious forecast, its results for the recently completed fiscal quarter exceeded market expectations across most major business segments.
Revenue increased 16.4% to $109.42 billion, surpassing analysts’ estimates.
Earnings reached $2.02 per share, including 11 cents per share related to a refund of U.S. import tariffs. Even without that one-time benefit, Apple’s earnings exceeded Wall Street’s forecast of $1.89 per share.
iPhone Delivers a Record Third Quarter
The iPhone remained the company’s strongest growth engine.
iPhone revenue rose 21.7% to $54.25 billion, exceeding the market forecast of $53.86 billion.
It was Apple’s strongest fiscal third quarter for iPhone sales on record. Smartphone demand typically begins to slow during this period as customers wait for new models traditionally introduced in the fall.
The unusually strong performance raised questions about whether consumers were accelerating purchases ahead of possible price increases.
Apple has already raised prices for some Mac and iPad models as higher memory-chip costs spread through the global electronics industry. Analysts increasingly expect the company to consider raising iPhone prices around its September product launch.
Mac Sales Surge Despite Supply Constraints
Apple’s Mac division also delivered a strong performance.
Mac revenue increased 28.7% to $10.35 billion, significantly exceeding analysts’ forecast of $8.74 billion.
The gains were driven by demand for the lower-priced MacBook Neo and the premium MacBook Pro, despite higher prices across parts of the computer lineup.
Cook said Apple’s strong product cycle exceeded the company’s expectations, while the advanced semiconductor supply chain remained too inflexible to respond quickly to higher demand.
iPad Revenue Declines
Not all of Apple’s businesses delivered comparable growth.
iPad revenue declined 5.9% to $6.19 billion, missing Wall Street’s estimate of $6.92 billion.
Cook attributed the decline to a difficult comparison with the previous year, when Apple introduced a lower-priced iPad powered by the A16 processor.
China Revenue Rises but Misses Forecasts
Revenue in Greater China increased 22.4% to $18.82 billion.
Although the result represented substantial annual growth, it remained below the $19.67 billion forecast compiled from analysts surveyed by Visible Alpha.
The figures suggest that Apple continues to face intense competition in one of its most important international markets.
Services Business Comes Under Pressure
Apple’s services division, its second-largest source of revenue, grew 12.1% to $30.74 billion. The result fell short of analysts’ expectations of $31.22 billion.
The slowdown concerned some investors because services have traditionally provided Apple with predictable, high-margin recurring revenue.
DA Davidson analyst Gil Luria warned that weaker services growth could become more pronounced if iPhone sales eventually begin to slow.
Parekh said App Store revenue from mobile games was facing pressure. Apple is also adapting to regulatory and legal changes that are reshaping the economics of its digital marketplace.
The European Union has required Apple to allow greater access to alternative iPhone app stores and payment systems. In the United States, the company’s legal battle with “Fortnite” developer Epic Games has made it easier for some users to make purchases outside Apple’s in-app payment system.
Apple Looks to AI and Paid Services
Despite these pressures, Apple is continuing to invest in artificial intelligence and subscription-based services.
Earlier this year, the company introduced an updated version of Siri with new AI capabilities developed with assistance from Google, part of Alphabet.
Cook indicated that some advanced AI features could eventually be incorporated into premium iCloud+ subscription packages.
“We will have opportunities to upgrade iCloud+, where people will be able to purchase the full package of services,” Cook said.
Supply Chains Become a Strategic Test
The central message from Apple’s quarter was clear.
Demand for the company’s products remains strong, revenue continues to expand, and its most important hardware businesses are outperforming expectations.
But Apple’s future growth is becoming increasingly dependent on something beyond product design, software development and brand loyalty: the ability of the global semiconductor industry to provide enough advanced chips to meet demand.
For one of the world’s most valuable companies, supply-chain resilience is no longer merely an operational concern. It has become a strategic advantage as important as innovation itself.
