Apple shares sink on disappointing September quarter sales outlook

Investing.com - Shares of Apple (NASDAQ: AAPL) tumbled by more than 7% in premarket trading after the iPhone-maker unveiled current-quarter sales guidance which underwhelmed Wall Street expectations.

Sales growth in the September quarter is projected to be between 9% and 11%, just shy of analysts’ estimates of about 12%. The outlook for gross profit margins also disappointed forecasts.

Along with foreign exchange headwinds, the company has been grappling with supply chain snags that have made it more difficult to meet demand for its popular devices, and worries abound that the trend could continue into the current quarter. At the same time, a spike in memory chip costs is anticipated to further dent profits.

"Memory constraints, component shortages, and FX headwinds are pressuring results, as we believe Apple has used most of its lower-priced inventory and is not as prioritized in the supply chain as previous cycles," analysts at Barclays said in a note.

"We believe the component shortages are at leading edge nodes that are now being prioritized for AI over Apple products."

The firm has lagged many of its mega-cap peers in embracing AI, and has opted to spend significantly less in capital expenditures on the nascent technology. However, analysts have argued that the relative lack of AI spending may mean that Apple will not face the same cash flow pressures as its big-name rivals.

Against this backdrop, Apple’s stock had seen the best year-to-date advance among its Magnificent Seven peers, surging by 22.7% and briefly bringing its market capitalization above $5 trillion earlier this week.

According to Counterpoint Research, Apple is expected to gain market share on an annualized basis in 2026 across its smartphone, personal computer, tablet, and smartwatch segments.

June quarter iPhone sales jumped by around 21%, thanks in part to demand for its iPhone 17 model. Gross profits also climbed, but that was due largely to the one-time benefit of a $2 billion tariff refund.

Meanwhile, Apple’s second-biggest segment, Services, which includes online subscriptions such as iCloud, Apple Music, as well as fees collected from the App Store, saw sales growth of 12.1% year-on-year to $30.74 billion, below consensus estimates of $31.22 billion. It was also a slower rate of growth than the second quarter.

Meanwhile, Greater China sales increased 22.4% to $18.86 billion, also missing expectations. This came despite Counterpoint Research data showing Apple outperforming the broader market in terms of China smartphone shipments in the second quarter.

Overall, the California-based group, whose CEO Tim Cook was overseeing his final earnings report at the helm of the business, earned $2.02 per share on revenue of $109.42 billion for the quarter. Analysts had been expecting a profit of $1.89 per share on revenue of $108.86 billion. The bottom-line was aided by a favorable impact from tariff refunds.

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