AAPL FQ3‘26: Memflation takes a bite out of the Apple

Research evidence excerpt

AAPL FQ3‘26: Memflation takes a bite out of the Apple

Y, driven almost entirely by double-digit

growth in both iPhone and Mac. Product gross margin was 40.1% (vs. consensus of 36.4%), improving 140 bps sequentially,

including a favorable 250 bps benefit from tariff refunds. iPhone revenue at $54.3 billion (vs. consensus of $53.6 billion), up

22% YoY. Mac revenue was particularly impressive at $10.4 billion (vs. consensus of $8.6 billion), growing 29% YoY, supported

by strong demand for the MacBook Neo and MacBook Pro. Management specifically highlighted two AI workload use

cases for Mac during the earnings call: 1) using Mac mini as a powerful platform for agentic AI and 2) deploying

clusters of Mac Studio systems to run frontier-class models locally. The good result in Mac and iPhone were achieved

despite ongoing supply constraints, which were most pronounced in the Mac portfolio and, to a lesser extent, in iPhone and

iPad. Looking ahead to the September quarter, supply constraints are expected to become more broad-based, affecting iPhone,

Mac, and iPad, with limited flexibility across the supply chain to meaningfully mitigate the impact.

Services revenue reached $30.7B (missed consensus of $31.4 billion), up 12% yoy though decelerating from the 16%

growth in the March quarter primarily due to FX, with softer mobile gaming, App Store business-model and regulatory changes,

and a tough comp against the F1 theatrical release also weighing on growth. Despite the deceleration, the underlying franchise

remains healthy: Apple set revenue records in every Services category, including all-time highs in cloud services and payment

services, surpassed 1.5B paid subscriptions, and posted all-time-high transacting and paid accounts with double-digit growth

in emerging markets.