AAPL Slides 6% as Cook Warns of Memory 'Flood'
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- Apple beat Q3 estimates with EPS of $2.02 and revenue of $109.42 billion, but shares slid more than 6% in extended trading as forward guidance and supply worries took center stage
- Apple guided for current-quarter revenue growth of just 9-11%, missing analyst expectations of 12%, with CFO Kevan Parekh citing supply constraints and FX headwinds expected to reduce growth by 2.5 percentage points
- Tim Cook described the memory supply situation as a "hundred-year flood," said Apple has paid higher memory costs for three straight quarters, and hiked Mac and iPad prices in June while holding off on iPhones
- Mac sales surged nearly 29% to $10.35 billion, which Cook attributed to the new low-cost MacBook Neo laptop introduced in March alongside strong MacBook Pro sales
- Tariff rebates added 11 cents per share to earnings and boosted gross margin to a record 50.06%, after some of President Donald Trump's tariffs were struck down by the Supreme Court earlier this year
- John Ternus, Apple's current head of hardware engineering and a 25-year veteran, will take over as CEO on September 1 with Cook shifting to executive chairman
- China revenue climbed 22% to $18.82 billion, making the region Apple's third-biggest market
Why it matters: Apple's 50.06% gross margin record was lifted by roughly two percentage points from one-time tariff rebates, so underlying margin pressure is real even as the company logged a third straight quarter of 15%+ revenue growth. With the memory squeeze forcing price hikes on Macs and iPads — and analysts expecting iPhone increases to follow — the forward outlook shortfall signals that the component crunch, not demand, is now the binding constraint on a company entering a leadership transition.
