Apple's AI Boom Sparks Supply Chain Woes
Apple's Q3 2026 earnings report showed strong growth across various segments, but concerns about AI-related supply constraints and memory prices may impact future performance. The company's net sales are expected to close FY2026 with a 17% increase, while EPS (earnings per share) could grow by 22-23%. iPhone sales have been particularly strong, with a potential 25% increase over the previous year.
The 'Greater China' region has seen significant growth, with sales in nine months exceeding those of the entire previous fiscal year. The company's CFO stated that rising memory prices are fully responsible for the sequential gross margin decline. Apple's AI posture is seen as contrarian to its tech peers, with a focus on partnerships rather than owning capacity.
The quality of Apple's earnings beat is thinner than the headline suggests, with approximately eleven cents of its $2.02 EPS coming from tariff refunds. Analysts tagged its growth metrics accurately, but the warnings of a shortage due to AI demand may impact consumer preference for Apple's products.