Apple Earnings Live Updates: iPhone Sales Surge, AI and Supply Chain Concerns Dominate Tim Cook's Final Earnings Call as CEO

San Francisco, CA & Englewood Cliffs, NJ - Apple Inc. (NASDAQ: AAPL) reported stronger-than-expected earnings and revenue for its fiscal third quarter, largely propelled by a remarkable 22% surge in iPhone sales. However, the tech giant issued cautious guidance for the upcoming quarter, citing persistent supply constraints, which led to a notable dip in its stock price in extended trading. This report marks a significant moment as it's CEO Tim Cook's final earnings call before handing over leadership to John Ternus.

Financial Highlights vs. LSEG Consensus Estimates:

• EPS: $2.02 (vs. analyst estimates of $1.89)
• Revenue: $109.42 billion (vs. $108.65 billion estimated)

Key Segment Performance:

• iPhone Revenue: $54.25 billion (vs. $53.86 billion estimated)
• Mac Revenue: $10.35 billion (vs. $8.74 billion estimated)
• iPad Revenue: $6.19 billion (vs. $6.92 billion estimated)
• Wearables Revenue: $7.88 billion (vs. $7.82 billion estimated)
• Services Revenue: $30.74 billion (vs. $31.22 billion estimated)
• Gross Margin: 50.1% (vs. analyst estimates of 47.9% - boosted by tariff rebates)

Net income climbed to $29.79 billion, or $2.02 per share, from $23.43 billion, or $1.57 per share, in the prior year. Earnings included a 11-cent per share boost from tariff rebates.

Navigating Component Shortages and AI's Future

Apple is actively confronting a global memory crunch, a situation CEO Tim Cook described as a "hundred-year flood." This scarcity, coupled with a high demand for chip manufacturing capacity, has already forced Apple to increase prices on its Macs and iPads. While no immediate iPhone price hikes have been announced, many analysts anticipate them later this year.

Meanwhile, the company is gearing up for a significant September launch, which is expected to include new iPhone hardware and a redesigned Siri powered by Google's AI technology. This move is seen as a critical test for Apple as investors express concerns about its position in the rapidly evolving artificial intelligence landscape.

CEO Transition and Guidance

This earnings call marked Tim Cook's final appearance as CEO before he transitions to the role of executive chairman. Incoming CEO John Ternus, a seasoned 25-year veteran and current head of hardware engineering, is set to take the helm on September 1st. Ternus, who spoke briefly on the call, expressed excitement about the company's future in the AI space.

Apple forecast revenue growth for the current quarter to be between 9% and 11%, falling short of analysts' expectations of 12%. CFO Kevan Parekh noted that while iPhone demand remains high, foreign exchange headwinds and supply constraints are expected to impact revenue growth by approximately 2.5 percentage points.

Segment Deep Dives:

Mac Sales Surge on MacBook Neo Performance

Mac revenue saw a significant jump of nearly 29%, reaching $10.35 billion. This growth was largely attributed to the strong performance of the MacBook Neo, a cost-effective laptop introduced in March, and robust MacBook Pro sales. Apple had implemented price increases on Macs, including the MacBook Neo, towards the end of the quarter due to the ongoing supply crunch for memory and other critical components.

China Market Shines

Revenue in the Greater China region (including mainland China, Hong Kong, and Taiwan) surged by an impressive 22% to $18.82 billion. This success was driven by record June quarter iPhone sales and historically strong Mac sales in the region. Apple's ability to maintain pricing in China, while competitors raised theirs, has been a key factor in its market share gains.

Services Growth and Subscription Milestone

Apple's high-margin services division continued its steady growth, with revenue increasing by 12% to over $30 billion, despite missing analyst estimates slightly due to foreign exchange headwinds. The company highlighted growth across advertising, the App Store, AppleCare, music, video, cloud services, and payment services. Notably, Tim Cook announced that Apple has reached 1.5 billion paid subscriptions across its ecosystem.

Tariff Rebates Boost Gross Margin

Tariff refunds contributed approximately 11 cents per share to earnings and added two percentage points to Apple's gross margin, pushing it to a record 50.06%. Without these rebates, the margin would have been closer to analyst estimates.

Challenges Ahead: iPad Sales and Wearables

iPad sales experienced a 6% decline year-over-year, which the company attributed to a tough comparison with the previous year's strong performance driven by a new low-cost iPad model. The wearables and home category saw a more modest 6% annual increase to $4.9 billion, surpassing expectations.

Market Reaction and Future Outlook

Apple shares, which had traded lower leading into the earnings report, saw a decline of over 6% in after-hours trading. Despite the recent dip, the stock remains up approximately 23% year-to-date. Investors are closely watching Apple's ability to navigate component shortages, integrate AI effectively, and maintain its growth trajectory in a dynamic global market.

The company's capital expenditure strategy, which relies more on licensing and cloud partnerships rather than massive internal AI infrastructure investment, is also a key point of interest for investors.

CNBC's reporters contributed to this live update from San Francisco and Englewood Cliffs, New Jersey.

Correction: A previous version of this story contained an inaccurate figure for year-ago earnings.