Apple’s (AAPL) Apple Q3 FY2026 results landed well ahead of Wall Street’s expectations, yet the shares fell roughly 6% in the sessions that followed, as investors focused on below-consensus guidance and a looming leadership change rather than the record numbers themselves.
Record Revenue, Earnings Beat, But Guidance Disappoints
Revenue for the quarter ended 27 June rose 16% year on year to $109.4 billion, a third-quarter record, beating the consensus estimate of approximately $108.7 billion to $109 billion, according to Tickeron.
Diluted earnings per share climbed 29% to $2.02, clearing the analyst consensus of $1.89. Net income reached $29.8 billion, up 27% year on year, and operating cash flow for the quarter was $34.4 billion.
iPhone sales jumped 22% to $54.3 billion. Mac revenue surged 29% to $10.4 billion. Services reached $30.74 billion, up 12% and a quarterly record, though it came in short of the $31.22 billion analyst consensus, according to CNBC data cited by Yahoo Finance. The Services segment now counts over 1.5 billion paid subscriptions, according to Beta Finch.
Both the EPS and revenue beats were partly flattered by tariff refunds worth approximately $0.11 per share and roughly 2 percentage points of gross margin benefit, as reported by StockTitan, which republished Apple’s Business Wire press release. Gross margin for the quarter stood at 50.1%.
The company also declared a cash dividend of $0.27 per share, payable 13 August 2026 to shareholders of record as of 10 August 2026.
Management guided for Q4 FY2026 revenue growth of 9% to 11%, below the 12% analysts had modelled and carrying an approximately 2.5 percentage-point foreign-exchange headwind, Seeking Alpha noted from the earnings call transcript.
The Supply Crunch Behind the Apple Q3 FY2026 Guidance Miss
On the earnings call, Tim Cook attributed the constraint to advanced silicon nodes used in Apple’s system-on-a-chip designs, framing it as a demand-forecast problem rather than a chronic supply failure. He said iPhone and Mac had performed ‘remarkably better than we thought they would do,’ according to the Yahoo Finance earnings call transcript.
Business Insider reported that Cook likened the memory and supply upheaval to a ‘100-year flood,’ pointing to AI data centres consuming high-end memory and driving chipmakers to divert production capacity away from consumer devices including iPhones, Macs, and iPads. The warning echoed comments Cook made on Apple’s Q2 FY2026 call in May, when he flagged that memory costs would have ‘an increasing impact’ on the business, according to CNBC.
The guidance shortfall arrived alongside confirmation that Cook’s Q3 call was his last as chief executive. Yahoo Finance reported that hardware engineering chief John Ternus is set to take the role on 1 September. The timing adds a layer of uncertainty around Apple’s AI strategy and product roadmap at a moment when supply is already constrained.
Where Berkshire Stands
Warren Buffett’s Berkshire Hathaway remains Apple’s most-watched institutional shareholder. Berkshire’s Q2 2026 13F filing, submitted 14 August 2026, showed Apple as the largest position at 22.04% of a total 13F portfolio valued at $299.3 billion, with the Apple stake worth approximately $65.95 billion as of 30 June 2026, according to Valuesider.
The Berkshire Hathaway 2025 Annual Report shows the cost basis for the Apple position at $6.255 billion as of 31 December 2025, against a then-market value of $61.962 billion. The five largest holdings at that date represented 65% of the aggregate fair value of Berkshire’s disclosed equity securities.
The same Q2 2026 13F also disclosed that Berkshire increased its Alphabet Class A stake by 45.24% and its Class C stake by 658%, per Business Insider, making combined Alphabet holdings a material new weight in the portfolio. That shift does not displace Apple, but it signals Berkshire is broadening its technology exposure at a time when Apple’s near-term earnings trajectory faces supply-driven headwinds.
What the Numbers Imply for the Share Price
The investment debate on Apple is not whether the business is high-quality. It plainly is. The debate is whether the current price adequately accounts for three converging risks: a memory-constrained quarter ahead, a foreign-exchange drag of roughly 2.5 percentage points on Q4 revenue, and the execution risk of a CEO handover mid-cycle.
At a gross margin of 50.1%, even modest component cost increases flow directly into the earnings line. The 9% to 11% Q4 guidance implies a meaningful deceleration from the 16% revenue growth just reported, and that gap is what the market priced in with the post-earnings decline.
The binary setup from here is straightforward: if the iPhone 18 cycle absorbs the supply constraints more quickly than Cook’s ‘100-year flood’ framing implies, the Q4 revenue range proves conservative and the shares recover. If memory tightness persists into calendar year-end, the Q4 miss risks becoming a Q1 FY2027 conversation too. Ternus’s first earnings call in October will be the first real test of whether the market grants the new management team the same benefit of the doubt it has historically extended to Cook.
