Apple stock fell as much as 10% after its fiscal third-quarter 2026 results, even though the company posted record earnings per share and beat Wall Street's estimates. Weak fourth-quarter guidance and a memory-chip shortage drove the sell-off, while services revenue also missed expectations. Motley Fool's Catie Hogan says the outlook for long-term investors is not exactly alarming.
Apple (NASDAQ: AAPL) stock fell as much as 10% in a sell-off after the company reported record earnings per share and beat Wall Street estimates in its fiscal third-quarter 2026 results on July 30. The reaction came despite that headline strength, so what actually triggered the drop?
Weak guidance overshadows a beat
Services revenue fell short of expectations, coming in at $30.7 billion. Analysts had expected 12% revenue growth for the fourth quarter, but Apple's own guidance calls for growth of just 9% to 11%, and that gap is largely what drove the stock lower.
A memory shortage squeezes margins
Apple's management also pointed to serious constraints in DRAM and NAND memory chips, part of a shortage that has pushed available supply prices sharply higher. That leaves Apple to either absorb the added cost and let margins shrink, or pass it on to consumers who are already constrained on discretionary spending. The squeeze is not unique to Apple — it is hitting technology companies across the board.
The long-term case still holds, Fool argues
Even after the decline, Apple is still trading at a premium, and Hogan writes that the outlook is not exactly alarming for long-term investors. Demand for Apple's products remains strong and is likely to continue, she says, even after CEO Tim Cook's departure this year.
Hogan says she is bullish on Apple because it is taking a more conservative approach to artificial intelligence spending than its peers, and calls it a strong dividend-paying company. Outside of the memory shortage, she adds, little else is currently slowing the business down.
Source: The Motley Fool
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