Apple Beats Q3 Estimates With Strongest Revenue Growth Since December 2021

Mac revenue rose nearly 15% to $8.05 billion, fueled by refreshed MacBook Air models released just before the quarter began. Services, Apple’s high-margin business that includes iCloud, AppleCare, and App Store revenues, climbed 13% to $27.42 billion, boosted by double-digit growth in subscriptions and App Store sales.

What Dragged on Performance?

Two segments lagged behind. iPad revenue fell 8% to $6.58 billion, despite the launch of a new budget model in March. The wearables unit—home to the Apple Watch and AirPods—declined 8.6% to $7.4 billion. Both results missed analyst expectations, reflecting a broader slowdown in accessory demand.

Gross margin improved to 46.5%, ahead of the 45.9% estimate, suggesting solid pricing power and operational efficiency even as Apple absorbed $900 million in tariff-related costs during the quarter.

What’s the Outlook on China and AI Investment?

Apple’s Greater China sales rose 4% to $15.37 billion, reversing previous declines. Cook pointed to government subsidies on some Apple devices as a key tailwind in the region, signaling stabilization in a market that had recently been a drag on results.

On the AI front, Apple reaffirmed its commitment to expanding investment in the technology. Cook called AI “one of the most profound technologies of our lifetime” and noted the company had acquired around seven smaller AI firms this year, with plans to integrate AI across all platforms and products.

What Should Traders Watch Going Forward?

Traders should monitor Apple’s AI integration path and any additional M&A activity that could accelerate product development. Continued strength in iPhone upgrades and service growth will be critical in maintaining momentum, while tariff impacts and hardware softness remain key risks. Apple’s commentary on forward-looking demand and regional performance, particularly in China, will also be closely watched in the next earnings cycle.