Apple shares plunge after weak fiscal fourth-quarter guidance
Apple shares plunged in after-hours trading after the company issued fiscal fourth-quarter guidance below market expectations. The stock fell more than 8% at one point and was down 6.02% as of 6:40 a.m. Beijing time on July 31. On its earnings call, Apple forecast fiscal fourth-quarter revenue growth of 9% to 11%, below analysts’ consensus estimate. Executives said fourth-quarter revenue would be pressured by foreign-exchange movements and supply constraints. iPhone revenue is expected to be affected by supply limitations, with growth slowing to the mid-teens, or roughly 15%. Mac and iPad products are also expected to face supply-chain disruptions. Apple reported fiscal third-quarter revenue of $109.417 billion for the period from March 28 through June 27, 2026, up 16.36% from a year earlier and slightly above market expectations. Earnings per share rose about 29% year over year to $2.02, exceeding expectations. Excluding the one-time impact of a tariff rebate, quarterly EPS was about $1.91, just $0.02 above expectations. Gross margin increased to 50.1%. By business segment, product revenue was $78.68 billion, above the market estimate of $77.25 billion, while services revenue was $30.74 billion, below the estimate of $31.36 billion. iPhone revenue was $54.25 billion, above the $53.6 billion estimate, and accounted for 49.6% of total revenue. The iPhone remained Apple’s most important source of revenue. Mac revenue was $10.35 billion, well above the $8.62 billion estimate. iPad revenue was $6.19 billion, below the $6.89 billion estimate. Revenue from wearables, home and accessories was $7.88 billion, broadly in line with expectations. Apple’s board declared a cash dividend of $0.27 per share. The company said operating cash flow reached a record high and that its cash-generation capability remained strong. However, the after-hours market reaction suggested that investors may be more focused on the iPhone replacement cycle, services growth and the rollout of AI-related products. Apple is facing a global shortage of memory chips. Chief Executive Tim Cook recently described the situation as a “once-in-a-century severe supply shortfall.” Competition for chip capacity has already forced Apple to raise prices for Mac and iPad products. Apple has not said whether it will increase iPhone prices, but a number of analysts expect the iPhone to become more expensive as soon as this year. Amazon shares rose sharply in after-hours trading the same day, gaining more than 10% at one point. Amazon reported second-quarter revenue of $200.6 billion, up 20% year over year, and operating profit of $27.5 billion, up 43%. Its core cloud-computing business, AWS, generated $42.2 billion in revenue, above the $40.6 billion market estimate and up 37% year over year. That was AWS’s fastest growth in the past 18 quarters. Amazon CEO Andy Jassy said AWS’s AI business had surpassed $25 billion in annualized revenue and continued to grow at a triple-digit rate year over year. Amazon forecast third-quarter revenue of $197 billion to $202 billion, representing growth of 9% to 12%, and operating profit of $22.5 billion to $26.5 billion, up 29% to 52% year over year. U.S. stocks staged a broad rebound in the AI trade overnight. The three major indexes all rose: the Nasdaq Composite gained 2.78%, the S&P 500 rose 1.66% and the Dow Jones Industrial Average advanced 1.19% at the close. The Nasdaq-100 rose 3.4%, its third-largest gain of the year. Large technology stocks were mixed. Microsoft surged more than 15%, recording its largest-ever one-day increase in market capitalization. Amazon and Tesla rose more than 3%, while Nvidia gained more than 2%. Meta fell more than 7%, Apple declined more than 1% and Google finished slightly lower. Semiconductor stocks rallied broadly. The Philadelphia Semiconductor Index jumped 8.19%, narrowing its cumulative July decline to 20% and posting its largest one-day gain since April 2025. Lam Research rose more than 17%; Applied Materials and Teradyne gained more than 14%; AMD climbed 13%; Taiwan Semiconductor Manufacturing Co. American depositary receipts and Arm rose more than 7%; and ASML American depositary receipts and ON Semiconductor gained more than 6%. Memory-related stocks also surged. SanDisk jumped more than 25%, Micron Technology rose more than 18%, SK Hynix American depositary receipts gained more than 17%, Western Digital climbed more than 14% and Seagate Technology advanced more than 11%. Optical-communications stocks also finished sharply higher. Applied Optoelectronics rose more than 17%, Lumentum gained more than 15%, Credo Technology rose more than 13%, Coherent and Ciena climbed more than 12% and Corning gained 9%. Microsoft was the main engine of the latest AI rebound. Its earnings showed continued acceleration in cloud-revenue growth, with demand exceeding existing capacity. Capital spending was below expectations, and Microsoft maintained its forecast for positive cash flow in fiscal 2027. The market interpreted those results as a strong signal that returns on AI-infrastructure investment could be achievable, pushing a momentum index to its largest one-day gain since 2003. Looking ahead, some market analysts said strong corporate earnings, continued AI adoption, a resilient economy and favorable financial conditions continued to support an optimistic medium-term outlook for U.S. stocks.
On its earnings call, Apple forecast fiscal fourth-quarter revenue growth of 9% to 11%, below analysts’ consensus estimate. Executives said fourth-quarter revenue would be pressured by foreign-exchange movements and supply constraints. iPhone revenue is expected to be affected by supply limitations, with growth slowing to the mid-teens, or roughly 15%. Mac and iPad products are also expected to face supply-chain disruptions.
Apple reported fiscal third-quarter revenue of $109.417 billion for the period from March 28 through June 27, 2026, up 16.36% from a year earlier and slightly above market expectations. Earnings per share rose about 29% year over year to $2.02, exceeding expectations. Excluding the one-time impact of a tariff rebate, quarterly EPS was about $1.91, just $0.02 above expectations. Gross margin increased to 50.1%.
By business segment, product revenue was $78.68 billion, above the market estimate of $77.25 billion, while services revenue was $30.74 billion, below the estimate of $31.36 billion. iPhone revenue was $54.25 billion, above the $53.6 billion estimate, and accounted for 49.6% of total revenue. The iPhone remained Apple’s most important source of revenue. Mac revenue was $10.35 billion, well above the $8.62 billion estimate. iPad revenue was $6.19 billion, below the $6.89 billion estimate. Revenue from wearables, home and accessories was $7.88 billion, broadly in line with expectations.
Apple’s board declared a cash dividend of $0.27 per share. The company said operating cash flow reached a record high and that its cash-generation capability remained strong. However, the after-hours market reaction suggested that investors may be more focused on the iPhone replacement cycle, services growth and the rollout of AI-related products.
Apple is facing a global shortage of memory chips. Chief Executive Tim Cook recently described the situation as a “once-in-a-century severe supply shortfall.” Competition for chip capacity has already forced Apple to raise prices for Mac and iPad products. Apple has not said whether it will increase iPhone prices, but a number of analysts expect the iPhone to become more expensive as soon as this year.
Amazon shares rose sharply in after-hours trading the same day, gaining more than 10% at one point. Amazon reported second-quarter revenue of $200.6 billion, up 20% year over year, and operating profit of $27.5 billion, up 43%. Its core cloud-computing business, AWS, generated $42.2 billion in revenue, above the $40.6 billion market estimate and up 37% year over year. That was AWS’s fastest growth in the past 18 quarters.
Amazon CEO Andy Jassy said AWS’s AI business had surpassed $25 billion in annualized revenue and continued to grow at a triple-digit rate year over year. Amazon forecast third-quarter revenue of $197 billion to $202 billion, representing growth of 9% to 12%, and operating profit of $22.5 billion to $26.5 billion, up 29% to 52% year over year.
U.S. stocks staged a broad rebound in the AI trade overnight. The three major indexes all rose: the Nasdaq Composite gained 2.78%, the S&P 500 rose 1.66% and the Dow Jones Industrial Average advanced 1.19% at the close. The Nasdaq-100 rose 3.4%, its third-largest gain of the year.
Large technology stocks were mixed. Microsoft surged more than 15%, recording its largest-ever one-day increase in market capitalization. Amazon and Tesla rose more than 3%, while Nvidia gained more than 2%. Meta fell more than 7%, Apple declined more than 1% and Google finished slightly lower.
Semiconductor stocks rallied broadly. The Philadelphia Semiconductor Index jumped 8.19%, narrowing its cumulative July decline to 20% and posting its largest one-day gain since April 2025. Lam Research rose more than 17%; Applied Materials and Teradyne gained more than 14%; AMD climbed 13%; Taiwan Semiconductor Manufacturing Co. American depositary receipts and Arm rose more than 7%; and ASML American depositary receipts and ON Semiconductor gained more than 6%.
Memory-related stocks also surged. SanDisk jumped more than 25%, Micron Technology rose more than 18%, SK Hynix American depositary receipts gained more than 17%, Western Digital climbed more than 14% and Seagate Technology advanced more than 11%.
Optical-communications stocks also finished sharply higher. Applied Optoelectronics rose more than 17%, Lumentum gained more than 15%, Credo Technology rose more than 13%, Coherent and Ciena climbed more than 12% and Corning gained 9%.
Microsoft was the main engine of the latest AI rebound. Its earnings showed continued acceleration in cloud-revenue growth, with demand exceeding existing capacity. Capital spending was below expectations, and Microsoft maintained its forecast for positive cash flow in fiscal 2027.
The market interpreted those results as a strong signal that returns on AI-infrastructure investment could be achievable, pushing a momentum index to its largest one-day gain since 2003.
Looking ahead, some market analysts said strong corporate earnings, continued AI adoption, a resilient economy and favorable financial conditions continued to support an optimistic medium-term outlook for U.S. stocks.