Apple reports third quarter earnings on Thursday, with analysts expecting earnings per share of $1.89 on revenue of $108.8 billion. The report follows price increases on Macs and iPads driven by rising memory costs, and it will be Tim Cook's last as chief executive.
Apple's third quarter earnings are on deck Thursday, setting up a potential reprieve from the week's chip and AI stock sell-off. Shares of the iPhone maker have benefited from their general lack of exposure to the AI trade, with investors flocking to the stock as a safety play.
That safety bid briefly sent the company's market capitalization to around the $5 trillion mark on Tuesday. Apple stock is up some 24% year to date, easily outpacing the rest of the "Magnificent Seven" stocks. Google is the second-best performer of the group in the period, climbing roughly 7%.
Analysts expect $108.8 billion in quarterly revenue
For the third quarter, Apple is expected to report earnings per share of $1.89 on revenue of $108.8 billion. That would mark a jump from the EPS of $1.57 and $94 billion in revenue the company saw in the same period last year.
The iPhone carries most of that growth. Apple's iPhone revenue is projected to hit $53.5 billion, a 20% increase from the $44.5 billion the company brought in in Q3 2025. Services, its second-largest business, is anticipated to see revenue of $31.3 billion, up 14%, while revenue out of China is expected to grow 27% to $19.5 billion.
Memory costs push Mac and iPad prices higher
Apple has outperformed its Big Tech peers, yet the Cupertino, Calif.-based company still faces its own AI-induced headache: rising memory and storage costs, thanks to the global AI build-out. That has driven it to increase the price of its Macs and iPads, though the iPhone has been spared at least for now.
The iPhone maker is widely expected to boost the price of its next-generation iPhones when it unveils the products at its annual showcase in September.
Jefferies and KeyBank flag margin and growth risks
According to Jefferies analyst Edison Lee, the increases in memory prices could pressure Apple's iPhone margins going forward. Lee estimates memory costs would rise further in the second half of 2026: "That could reduce the overall iPhone GM from 38% to 34.5%".
But Brandon Nispel of KeyBank Capital Markets sees a potential iPhone price increase as a far larger issue for Apple than an impact on gross margins. As Apple raises iPhone prices, Nispel wrote, unit growth will slow, then user growth, which he thinks ultimately will slow Services growth.
Apple's new Apple Upgrade service, announced Tuesday, allows customers to lease devices from iPhones to Macs and could help address those concerns. All of this will fall on incoming CEO John Ternus, who takes over the role from Tim Cook beginning Sept. 1. Thursday's earnings will be Cook's last in the position.
Source: Yahoo Finance
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