iPhone sales drove Apple’s fiscal Q3 to the biggest revenue growth since 2021
One of the biggest surprises came from China.
The iPhone is still doing the heavy lifting for Apple. In its fiscal third quarter, the tech giant leaned once again on its flagship product, and it paid off. Surging demand for the iPhone 16 helped Apple deliver its strongest revenue growth since 2021, putting concerns about a slowdown on hold.
The tech giant pulled in $94.04 billion in revenue for the quarter ending June 28, up 9.7% from the same period last year. That beat analysts’ expectations of $89.53 billion and marked the company’s biggest top-line growth since December 2021. The 9.7% YoY revenue growth this quarter is the company's highest growth rate since the 11.22% growth it reported in the first fiscal quarter of 2022 (which ended in December 2021).
Net profit also topped forecasts, climbing from $21.45 billion to $24.43 billion, an increase of 14% year-over-year, with earnings per share at $1.57.
iPhone success drives Apple's growth
Fueling those results was the iPhone, which accounted for nearly half of Apple’s total revenue. Sales jumped 13% year-over-year to $44.58 billion, as demand surged among loyal users upgrading from older models. CEO Tim Cook said the iPhone 16 significantly outperformed last year’s version, especially among existing customers.
That momentum spread across Apple’s ecosystem. The Mac business got a lift from new MacBook Air models, growing nearly 15% to $8.05 billion. Services revenue reached an all-time high of $27.42 billion, thanks to rising iCloud subscriptions and steady gains on the App Store. Together, these segments helped push Apple’s growth to a level it hadn’t seen since the pandemic-era sales boom of late 2021.
Apple got some 'love' from China
One of the biggest surprises came from China. After two straight quarters of decline, sales in the region grew 4% to $15.37 billion. Cook pointed to local subsidies that helped make Apple’s products more affordable at a time when competition from domestic brands is intensifying.
Emmanuel Oyedeji
Still, the quarter wasn’t without its weaker spots. iPad sales fell 8% to $6.58 billion despite a new budget model hitting the shelves. The wearables category, which includes Apple Watch and AirPods, also took a hit, dropping to $7.4 billion. But those slips were outweighed by stronger performances elsewhere.
Apple is also navigating a tricky geopolitical and economic landscape. The company spent $800 million dealing with tariffs this quarter and expects that figure to rise to $1.1 billion in the next quarter. Still, gross margins held steady at 46.5%, showing Apple’s ability to manage costs even in tougher conditions.
Emmanuel Oyedeji
A future with more investments in AI
Looking forward, Apple expects more growth in the current quarter, with mid-to-high single-digit gains and healthy margins. And while its AI announcements at WWDC didn’t exactly shake the market, Cook insists the company is ramping up. Apple has made seven AI-related acquisitions this year and says it’s embedding the technology deeper across its products and platforms.
The AI headlines may be louder elsewhere, but Apple's iPhone continues to anchor the business, and Services keeps stretching its influence.
