Apple reported its strongest June quarter on record, but part of the earnings surge came from tariff refunds rather than ordinary operations, while a weaker sales forecast and worsening chip shortages sent its shares sharply lower Friday morning.

Fiscal third-quarter revenue rose 16% from a year earlier to $109.4 billion, according to Apple’s financial results. Net income increased to $29.8 billion, while diluted earnings climbed 29% to $2.02 a share. iPhone revenue jumped nearly 22% to a June-quarter record of $54.3 billion, and Mac sales rose almost 29% to $10.4 billion. 

A portion of that earnings strength, however, came from tariff refunds Apple received after duties previously collected by the U.S. government were overturned. The reimbursements added approximately two percentage points to Apple’s reported 50.1% gross margin and contributed 11 cents to quarterly earnings per share.

Without the refund benefit, Apple’s gross margin would have been about 48.1% and earnings would have been closer to $1.91 a share. The underlying results still exceeded Wall Street expectations, but the adjustment makes the quarter less exceptional than the headline figures initially suggested. 

Investors focused instead on what comes next. Apple projected revenue growth of 9% to 11% for the September quarter, below the roughly 12% increase analysts had expected. Shares fell about 7% before Friday’s opening bell, threatening to erase hundreds of billions of dollars from the company’s market value. 

Supply limitations, rather than weakening demand, were at the center of the forecast. Apple said shortages of advanced processors and memory components were constraining its ability to produce enough iPhones, Macs and other devices to meet customer demand.

The AI infrastructure boom is intensifying that pressure. Cloud companies and data-center operators are buying enormous quantities of advanced chips and memory, creating competition for components also used in smartphones and computers. Even Apple’s purchasing scale has not fully protected it from the shortage.

Management is examining additional memory suppliers and working with manufacturing partners to increase availability. Yet limited flexibility across the semiconductor supply chain means Apple may have to choose among accepting lower margins, raising device prices or allowing product shortages to limit sales.

Some price adjustments have already begun. Higher component costs prompted Apple to increase prices on certain Mac and iPad models, while iPhone prices have so far remained unchanged. Continued memory inflation could make the next generation of devices more expensive for consumers and businesses.

Services revenue offered another warning. Sales from the App Store, subscriptions, cloud storage and other services rose 12% to $30.7 billion, but came in below market expectations. That business has historically provided Apple with higher margins and more predictable revenue than hardware, making any slowdown especially important.

Several legal and regulatory changes are also reducing Apple’s control over App Store payments and commissions. Those pressures arrive as AI assistants threaten to change how consumers search, shop and access digital services, potentially weakening the importance of traditional app-based distribution.

Apple’s results therefore reveal two different businesses moving in opposite directions. Current demand for iPhones and Macs remains exceptionally strong, but the company’s ability to fulfill that demand is being challenged by the same AI investment wave benefiting cloud providers and semiconductor manufacturers.

Strong cash generation gives Apple room to absorb temporary disruptions. The larger concern is whether component shortages persist long enough to restrict sales during major product launches or force prices higher at a time when consumers are already managing elevated living costs.

Friday’s market reaction shows that record sales are no longer enough by themselves. Investors are separating Apple’s underlying operating performance from the temporary tariff-refund benefit and looking beyond the June quarter toward a period of slower growth, tighter supplies and rising production costs.

JBizNews Desk | Cupertino, California

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