Apple's Strong Earnings Can't Shield Shares from Rising Memory Prices

Apple's Q3 revenue rose 16% Y/Y to $109.4 billion ($0.5 billion beat), while EPS reached $2.02 ($0.13 beat). The company's underlying results still came in ahead of expectations, with tariff refunds contributing $0.11 to EPS. Despite these strong numbers, shares fell about 6% after earnings.

The growth was driven by iPhone revenue, which grew 22% to a record $54.3 billion, and Mac sales, which jumped 29% to a record $10.4 billion. However, services slowed to 12% growth, reaching $30.7 billion. Tim Cook said that the company's supply chain is struggling to keep up with demand, citing 'a hundred-year flood' of memory price increases.

Apple guided revenue growth to 9%-11%, with iPhone expected to grow in the mid-teens. However, the outlook came in below consensus. The company also expects another step down in gross margin due to cheaper inventory running out and rising memory prices.