Apple delivered an earnings beat on the top and bottom line for its fiscal third quarter on Thursday, but its stock sank after hours as revenue from China, its services business, and iPad sales came in below Wall Street’s estimates. This marks CEO Tim Cook‘s final earnings cycle as CEO, with hardware boss John Ternus taking over on September 1st. Cook will remain on as executive chairman.
As the rest of the Magnificent Seven struggle with questions about what their AI capex is for, Apple has largely sidestepped the debate this year by focusing on consumer hardware. The stock is the best performer in the elite group of mega-cap tech names this year, up 25%. The company topped a $5 trillion market cap for the first time earlier this week before falling slightly.
Apple’s outlook has challenges. Cook said earlier this year that Apple was raising prices to offset the supply crunch in memory hardware, and the move could impact demand for new devices. The iPhone was left out of Apple’s recent price hikes, but Apple is widely expected to boost prices in September with the new lineup as it faces cost pressures on its famously high gross margin. The company could provide signal on possible iPhone price hikes on the earnings call.
Investors are also going to want to hear at least some update about the company’s AI plans, even though Apple is not quite a capex story like other tech giants. At WWDC26, Apple introduced the all-new Siri AI, alongside all of Apple’s latest software innovations and important new child safety features. After years of delays and criticism, Apple finally unveiled its rebuilt version of Siri at its annual developer conference in June. It’ll get a new name: Siri AI. The company says Siri AI will hold more natural conversations, understand what users are viewing onscreen, draw on information from their emails and messages, and complete tasks across multiple apps. Some users have started using the beta version of Siri AI. So far, they’re largely saying it’s a massive improvement over the current versions. A full launch is expected in the fall via a software update in September.
The big question: will it boost iPhone sales? In a note on Tuesday, Bank of America highlighted Apple Upgrade, which Apple announced earlier this week. The new offering allows customers to lease products like iPhones, Apple Watches, and iPads on monthly payment plans. Wamsi Mohan, an analyst at the bank, said in a July 28 note, “In our view, Apple Upgrade is directionally positive, with potential upside from lower affordability friction, premium mix, faster replacement cycles, greater direct engagement and residual-value monetization.” Bank of America has a “Buy” rating on Apple and a price objective of $380 a share, implying about 11% upside from current levels.
Earlier this week, the company launched Apple Upgrade in partnership with Klarna. It acts like a car lease but for new tech and offers lower monthly payments than financing a new iPhone. At the end of the term, customers can return the device, trade it in for a newer model, or pay the remaining balance to keep it.
Goldman expects Apple to post 18% year-over-year revenue growth, beating Wall Street’s 15% estimate, thanks in part to strong iPhone and Mac sales. Goldman has a “Buy” rating on the stock and said they expect the company’s services offerings like iCloud+ and AppleCare+ to be a leading driver of its growth going forward. Michael Ng, an analyst at the bank, said in a July 27 note, “The majority of gross profit growth over the next 5-years should be driven by Services, which should mark an inflection point in the Services investment narrative and support AAPL’s premium multiple.” The bank’s price target for the stock is $370 a share.
Apple increased prices across its Mac and iPad lineups on June 25, but has—so far—spared the iPhone from similar hikes. Analysts expect the tech company to raise the phone’s prices during the September launch of the iPhone 18. CEO Tim Cook or CFO Kevan Parekh might field questions on potential iPhone price hikes on the analyst call. The increases stem from a memory crunch that’s making it harder to build tech hardware. The tech industry is racing to secure memory chips—and the squeeze is driving up Apple’s costs. AI data centers are consuming enormous quantities of high-end memory, prompting chipmakers to devote more of their production capacity to the booming market. That has tightened supplies and raised prices for the memory and storage chips used in consumer devices such as iPhones, Macs, and iPads. Tim Cook has likened that upheaval to a “100-year flood.”
Dave Sekera, Morningstar‘s chief US market strategist, said in an email that Apple would be the “least interesting” of all the mega-cap firms this earnings season, as they’ve largely stayed out of the AI conversation. He said the main questions around the firm would be how they can offset rising memory costs and whether their higher iPhone 18 prices will cause a spike in buying of the iPhone 17. “With Apple, I think we need a better discussion of what they think AI use cases are going to be,” he said. “Apple has steered clear of capex spending on the AI buildout boom, which I think will probably serve them well over the longer term, but for now, we’re still not really understanding Apple’s killer case for AI that will drive a lot of new economic value for individual users.”