Originally published at: Apple’s Q3 2026 Earnings—Record Revenue and Marketing to the Street - TidBITS
Tim Cook’s final earnings call as Apple CEO was much like every other earnings call I’ve heard. There’s an intro where Cook summarizes the quarter’s financial results, couching it all in the highest possible praise for everything Apple has done in the past quarter. Then Apple CFO Kevan Parekh goes into the highly specific financial metrics, many of which are interesting only to the financial analysts listening in. Those analysts then get to ask questions that Cook and Parekh seldom answer. Only occasionally is something revealed that wasn’t previously common knowledge, and even then, it’s because Apple wanted to make the information public. It’s all a marketing exercise, although one aimed at Wall Street rather than customers.
I’ve become bored with the way we’ve been covering Apple’s earnings calls, so I’m going to do something a little different and share a bunch of things that jumped out at me. Some will be good, some will be less so, but regardless, I’ll try to avoid Apple’s spin, since Apple doesn’t need any marketing help from us.
Reality Check on Things Tim Praised
What does Apple think will play well with investors? AI, of course! That accounts for the following comments from Tim Cook:
We were tremendously excited to unveil the all-new Siri AI, a completely reimagined version of Siri that is profoundly capable, deeply personal, and integrated seamlessly across our platforms. And we’ve been absolutely thrilled by the response from people who’ve been using Siri AI in the developer and public betas. The reviews from early users have been phenomenal.
From who? I’ve been using the iOS 27 beta for a few weeks now, and my experiences with Siri AI have been pretty weak. It failed to look up local showtimes for The Odyssey and completely biffed several queries because its voice recognition incorrectly transcribed names I spoke. It did correctly identify a photo of pansies that were used decoratively in drinks we had recently, but Visual Intelligence could do that before. Worse, traditional Siri tasks like asking it to play music have become noticeably less accurate—recently, it took me three tries to get it to play the Irene Cara theme to the movie Fame rather than the David Bowie song “Fame.” And Siri in watchOS 27 now takes 5-6 seconds to start a timer (though it does adjust the countdown by about 3 seconds) and fails completely on previously simple commands to Workouts like “Start outdoor ride.”
We’re excited about the work we’re doing on the next generation of Apple Intelligence, including Siri AI and the AI features we’re developing across our platforms. These experiences are intuitive and useful, while also deeply integrated in a way that’s personal and private, with the latest models running on device and on servers using Private Cloud Compute. We began laying the groundwork for users to have the best possible experience with AI when we introduced the Neural Engine in 2017.
Talk about a master class in marketing! Perhaps we should wait until actual users have had a chance to use OS 27’s Apple Intelligence and Siri AI before we agree that it’s “intuitive and useful” and “deeply integrated”—see above. Plus, notice how, even though Apple is clearly years behind the AI curve, Cook talks about Apple laying the groundwork as far back as 2017. I have nothing ill to say against Apple silicon, but seriously, “Apple Intelligence” and “the best possible experience with AI” are not phrases that go together (see “Do You Use It? Apple Intelligence Sees Weak Adoption,” 20 June 2025).
Ever since then, we’ve innovated and invested deliberately in silicon, systems, and scalable unified memory architecture designed with AI at their core. What sets Apple apart is the unique combination of massive unified memory bandwidth, industry-leading power-efficient performance, and deep on-device intelligence, all built around the customer experience from the ground up. The result is that Apple has created the world’s best hardware to experience AI, whether using Apple Intelligence, including Siri AI, or third-party offerings. That’s why developers and researchers are increasingly using Apple devices to build ever more advanced tools and models.
I’m sure some people are doing that, but from what I hear from my son, who’s a PhD candidate in an AI field and thus steeped in research papers, it’s not happening in academia, where everything—code, libraries, hardware, and institutional investment—revolves around Nvidia’s GPUs and CUDA parallel computing platform.
As we continue to develop new capabilities for users around the world, we’re also doing our part to invest in innovation close to home. Last year, we made a $600 billion commitment to the U.S. over four years, and now, as we said before, we plan to reinvest the tariff refunds we’ve received into the U.S. We’re pleased with the progress we’ve already made advancing the American supply chain. Earlier this month, Apple announced a new agreement with Broadcom to design and produce custom silicon components and cutting-edge wireless connectivity technologies. The new multi-year agreement with Broadcom, which is part of Apple’s American manufacturing program, is expected to exceed $30 billion. This marks our largest ever American manufacturing program commitment. It’s also an important step forward in our work to build an end-to-end silicon supply chain here in the U.S.
This is the first I’ve heard of an “end-to-end silicon supply chain” in the US. What is it supposed to be? To my understanding, it’s completely impossible to manufacture any Apple devices solely in the US—too many components come from other countries.
Everything in this paragraph is clearly aimed at telling the current administration, “Look, we’re doing lots of stuff in the US! Don’t tariff us! And, see, the previous tariffs we paid and you had to give us back because they were illegal, we’re spending those in the US too.”
Throughout all of it, we will remain guided by our North Star, building the best products and services to enable people to do magical things. It’s a special privilege to be part of people’s lives in lasting and meaningful ways, helping them to create, connect, and experience the world around them.
Lasting and meaningful ways like ads in Apple Maps. You cannot imagine how magical it will be to experience those ads.
Apple’s Actual Financial Results
As usual, Apple made an obscene amount of money, posting revenue of $109.4 billion, up 16% from the year-ago quarter. That’s equivalent to the entire economic output of the country of Oman for a year. For a better comparison, Apple’s trailing-twelve-month revenue is about $467 billion, or between the annual GDPs of Denmark and Malaysia.
Perhaps unsurprisingly, though Cook and Parekh made sure to tell us, this overall June quarter record includes June quarter records in—deep breath: revenue ($109.4 billion), net income ($29.8 billion), diluted earnings per share ($2.02), operating cash flow ($34.4 billion), iPhone revenue ($54.3 billion), Mac revenue ($10.4 billion), Services revenue ($30.7 billion), iPhone upgraders, Apple Watch upgraders, advertising, App Store, AppleCare, Music, Video, every geographic segment, specific markets (the US, Latin America, Western Europe, India, China mainland, Japan, and Southeast Asia), and both developed and emerging markets. And then there are the all-time records in cloud services, payment services, Mac sales in emerging markets, Mac sales in Greater China, Mac upgraders, customers new to the Mac, and Apple TV viewership. I’m not offended if your eyes glazed over reading that paragraph.
The big winners were the iPhone (up 22% from last year’s June quarter), the Mac (up 29%), and Services (up 12%). Even Wearables managed a 6% increase, whereas revenues for the beleaguered iPad fell 6%. Here’s some “color,” as the financial analysts like to say, but with actual colored graphs:
- iPhone ($54.3 billion): As Cook said, “This is the most powerful and most popular iPhone lineup we’ve ever had. More people are relying on iPhone every day for AI, powered by the outstanding performance of A19 and A19 Pro.” I certainly hope it’s the most powerful lineup, since it would be bad for the lineup to get less powerful. But no, people aren’t using the iPhone for AI. They’re using it for all the stuff they’ve always used the iPhone for, and some of that might involve AI. Clearly, there’s no lack of demand.
- Mac ($10.4 billion): I always root for the Mac to outperform other segments, and this time it did, posting a 29% gain from last year that outpaced the iPhone and Services. Go Mac! Apple never shares sales figures for specific models, but my money would be on the MacBook Neo driving the money bus, thanks in part to major school systems switching to it from Chromebooks and Windows laptops—Apple called out three districts serving 39,000 students total. Even more impressive was that the Mac’s year-over-year increase came despite supply constraints, which Cook admitted was because Apple failed to predict demand accurately and suffered from “less flexibility in the supply chain than normal.” To me, that means Apple biffed predictions for how many chips it would need, and TSMC couldn’t make more—Cook’s specific phrase was, “the constraints were primarily driven by the availability of the advanced nodes that our SOCs are produced on.”
- iPad ($6.2 billion): Oh, the poor iPad. It’s not a bad business—$6.2 billion isn’t chump change, even if it’s a 6% drop from the previous year—but it just can’t compete with the upward momentum enjoyed by the iPhone, Services, or even the Mac. Kevan Parekh attempted to explain away the iPad’s moribund showing as a “difficult compare” with last year’s launch of the A16-powered iPad. That may be, but Q3 2025 was an 8% drop due to another “difficult compare” with Q3 2024. Was the 2024 release of the M2 iPad Air and M4 iPad Pro really so much better than anything since (see “Apple Reports Record-Breaking Q3 2025 Results,” 1 August 2025)? Nonetheless, Apple made sure to tell us that the installed base of iPads is at an all-time high, but that just means Apple is selling more new iPads than users are recycling—if the installed base started to shrink, that would be truly terrible news.
- Wearables, Home, and Accessories ($7.9 billion): Another category that doesn’t get much respect because it’s such a catch-all. It includes the Apple Watch and AirPods, both of which are popular, but also the HomePod and the Vision Pro, which are not. And the Apple TV, which probably falls somewhere in between. Cook said nice things about the Apple Watch and AirPods, but studiously avoided saying anything about the HomePod or Apple TV hardware. The Vision Pro’s only mention was, “And Apple Vision Pro is adding a feature for power wheelchair users to control drive systems using just their eyes.” Very cool for that community, but wouldn’t it be better if Apple could build that technology into a device that costs significantly less than $4000?
- Services ($30.7 billion): Is it just me, or does the Services revenue chart always look fake? It’s like a graph you see in a cartoon, or one that turns out to have been generated from made-up data. Some of Apple’s services are pretty good; others less so, but apparently, having 1.5 billion paid subscriptions with a 75% gross margin is a license to print money. Raising prices doesn’t hurt, either (see “Apple Increases Apple Music, Apple One, and AppleCare+ Prices,” 20 July 2026). I’m fine with Apple adding an iCloud+ tier for anyone who needs more AI compute, but we can really do without ads in Apple Maps. What if we all continually report them to Apple as bugs?
RAMaggedon and FX Headwinds
Scrooge McDuck levels of revenue aside, it’s not all smooth sailing for Apple going forward. A major point of these earnings calls is to set analyst expectations so Wall Street can build that into its perception of the stock price. Cook and Parekh were careful to call out two concerns: memory prices and exchange rates.
Explaining the recent hardware price increases, Cook said, “we’re in what I would characterize as a hundred-year flood on the memory pricing with exponential increases in memory prices” (see “Apple Raises Prices for Many Products,” 26 June 2026). As we noted in that article, the problem is demand from AI companies, which is causing the world’s three major memory manufacturers (Samsung, SK Hynix, and Micron) to redirect their manufacturing away from consumer memory needs.
To relieve some of the pressure, Apple is reportedly evaluating memory from several Chinese firms for use in devices sold in the Chinese market, freeing up memory from the big three for devices sold in the US. As you can imagine, this involves a wee bit of lobbying, which is what Cook will focus on after he steps down as CEO. We’ll see what happens with the next generation of the iPhone and Apple Watch, due out in a few months, but it seems likely that prices will rise, just as they have for everything else. Other than TidBITS, which remains free, thanks to voluntary contributions from our members.
There was also a quote from Cook about the price increases that confirmed my analysis in “Apple Raises Prices for Many Products.” I wrote:
Apple undoubtedly has a big-picture view of its product line that takes into account unit sales for each product, the type and quantity of chips each requires, and how soon a revision will be available to adjust pricing variables. In other words, each individual price increase—or lack thereof, in the case of the iPhone and Apple Watch—is just one piece of data in a much larger equation.
Whereas Cook said in response to an analyst question:
In terms of our philosophy on dollars or percentages, we look at units, revenue, and margin, and then come to a business judgment as to how to handle that. And so it’s not a mathematical formula that gets us to a specific result or just looking at one dimension of that. We look at all three dimensions and think about it over the long term instead of a 90-day clock.
The other major issue that Cook, Parekh, and the analysts spoke about in serious financial voices was “FX headwinds.” Every time I hear the term, I can’t help but imagine Cook at the bow of a CGI ship of the line, gazing into the distance as the wind whips his hair… no, it would have to be Craig Federighi if there’s hair involved. Anyway, foreign-exchange headwinds stem from the strength of the dollar against the currencies Apple collects from sales in other countries. The stronger the dollar against those currencies, the fewer actual dollars Apple can report.
I understand that exchange rates are a big deal in accounting for a multinational corporation like Apple, but I care about technology, not macroeconomics. I would note that Apple regularly complains about FX headwinds but only occasionally says it benefited from FX tailwinds. Is it that the dollar is usually strong, so Apple is attempting to say, “look, our actual business is better than the numbers look,” or is it that Apple would prefer to gloss over the tailwinds that make the business look better than it actually is? Honestly, I’m just not that interested.
But I am interested in AI. According to ChatGPT’s single-prompt analysis of earnings call transcripts since 2011, Apple talked about headwinds 42 times, compared to only 9 mentions of tailwinds. While I don’t know—or really care—if that number is accurate, that’s an impressive use of AI. So I asked Siri AI the same thing and got back this utterly lame response:
While I’m not a financial advisor, I could not confirm the exact historical counts of foreign exchange headwinds versus tailwinds in Apple’s earnings reports.
Consult a financial professional for personalized advice.
Keep in mind, I’m an assistant powered by AI and may make mistakes. Always verify important details.
Are you looking for this information for a specific time period?
Never mind, Siri. See you all next quarter, when we’ll see how incoming CEO John Ternus handles the analysts while announcing that Apple has removed ads from Apple Maps because they degrade the user experience. No, I don’t really expect that either.
