Apple Smashes Q3 Earnings with iPhone and Services Strength, But Tariff Jitters Keep Stock Gains in Check

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Apple delivered a blowout June quarter, easily surpassing Wall Street’s expectations on both revenue and earnings, but shares are only modestly higher in after-hours trading as investors weigh questions around sustainability and tariff impacts. The company posted revenue of $94.0 billion, up 10% year-over-year, and EPS of $1.57, up 12%, handily beating consensus estimates of $89.3 billion and $1.42, respectively. The standout drivers were iPhone and Services, while wearables came in slightly light. Gross margins also exceeded expectations, offering reassurance about Apple’s ability to protect profitability despite tariff headwinds.

Revenue growth of nearly 10% topped consensus expectations of 3.7%, marking Apple’s best June quarter on record. CEO Tim Cook highlighted broad-based strength across iPhone, Mac, and Services, with double-digit growth in all three categories. Notably, Cook also acknowledged that about one percentage point of growth came from customers pulling forward purchases ahead of tariff hikes, raising questions about potential demand softness later in the year. Investors will be looking closely at September-quarter guidance for signs of whether momentum will continue.

On EPS,

The iPhone segment was the crown jewel of the report. Sales reached $44.58 billion, beating consensus expectations of $40.22 billion by a wide margin. Year-over-year growth of 13% easily topped the roughly 2% forecasted by the Street. Analysts had been expecting around 45 million units, and June demand was aided by heavy promotions in China as consumers sought to get ahead of looming tariffs. Cook confirmed that pull-forward demand accounted for about one percentage point of the iPhone’s growth, but said the company remains confident in its long-term iPhone cycle, especially with ongoing integration of Apple Intelligence features.

Services also impressed, generating $27.42 billion in revenue versus the $26.8 billion estimate. Growth of 13% year-over-year topped expectations for 12% and reflects continued strength in the App Store, as well as gains in iCloud, Apple Music, and Apple Pay. Services remain Apple’s fastest-growing high-margin segment, underscoring their importance in offsetting potential hardware volatility.

Mac revenue also delivered a strong surprise, coming in at $8.05 billion against expectations of $7–8 billion, and up sharply from $7.26 billion last year. Management cited strong demand for the M4 chip and seasonal back-to-school buying. The strength in Mac was part of a broader trend, as Apple reported double-digit growth in all geographic segments, including Greater China ($15.37 billion versus $15.12 billion expected), the Americas ($41.2 billion), and Europe ($24.01 billion).

Not all product lines fared as well. iPad revenue came in at $6.58 billion, below the $7.24 billion consensus, reflecting softer demand and tough comps. Similarly, Wearables, Home, and Accessories posted $7.40 billion, shy of the $7.82 billion forecast, down about 5% year-over-year. Management noted that tough prior-year comparisons and tariff-related cost pressures weighed on the category.

Gross margin was another highlight, landing at 46.5%, above the 45.8% consensus and within Apple’s guided range of 45.5%–46.5%. Analysts had flagged about $900 million in tariff-related costs this quarter, but Apple managed to preserve margins through a combination of pricing discipline and efficiency gains. Parekh emphasized Apple’s focus on cost control and operational efficiency, while Cook signaled that AI-driven productivity gains are beginning to play a larger role in keeping margins healthy.

Looking forward, investors are eager for guidance on the September quarter, particularly given tariff uncertainty and the potential for softer demand following the Q3 pull-forward. Apple’s WWDC25 announcements on Apple Intelligence and Siri enhancements were cited as foundational for future growth, with Cook saying, “Our AI progress across the board continues to improve our customer experiences, speed of innovation, operational efficiency, and business growth.”

Overall, Apple’s Q3 results easily cleared the bar set by Wall Street, with iPhone and Services leading the way, gross margins holding firm, and broad-based geographic strength. Still, the modest after-hours stock move underscores lingering investor caution about the durability of demand amid tariff uncertainty and the September-quarter setup.