Apple Services Miss Falls Short of Expectations, Shares Plummet
Apple's services business fell short of expectations in its latest quarterly earnings report, causing investors to panic and sending shares sharply lower. Despite delivering another quarter of headline-beating results with revenue and earnings topping Wall Street's estimates, the company's guidance failed to impress.
The iPhone maker reported fiscal third-quarter 2026 results on July 30, with revenue climbing 16.4% year-over-year (YOY) to $109.4 billion and earnings per share (EPS) increasing 29% to $2.02 from $1.57 a year earlier.
The company's services business remained a bright spot in fiscal Q3 2026, with revenue rising 12.1% YOY to $30.74 billion, but this growth was slower than expected. Management attributed the miss primarily to weaker mobile gaming spending and regulatory changes affecting the App Store business model.
CEO Tim Cook pointed out that Apple is struggling to meet demand due to persistent shortages of advanced chipmaking capacity and memory components, rather than weakening consumer demand. The company forecast September-quarter revenue growth of 9% to 11%, below Wall Street's expectation.