Apple delivered its strongest quarterly performance in nearly three years, surpassing Wall Street expectations for both profit and revenue in its fiscal third quarter ended June 28.
Buoyed by robust iPhone sales and an unexpected rebound in China, the tech giant also reaffirmed its growing commitment to artificial intelligence, signaling plans to embed it deeply across its product lines.
The company posted earnings per share of $1.57, beating the $1.43 analysts had forecast, on revenue of $94.04 billion — its highest growth since December 2021. That represented a 10% increase year over year. Net income rose to $24.43 billion from $21.45 billion a year ago. Apple shares rose in after-hours trading following the announcement.
“This was an exceptional quarter by any measure,” CEO Tim Cook said in an interview with CNBC.
iPhone: Still the Growth Engine
Apple’s iPhone segment — its most crucial business — delivered $44.58 billion in revenue, growing 13% from a year earlier and beating consensus estimates of $40.22 billion. Cook credited the strong showing to the popularity of the iPhone 16, which he said is seeing “strong double-digit” sales growth compared to last year’s iPhone 15 lineup. He added that the growth was fueled in part by existing iPhone users upgrading to newer models.
Cook also revealed that roughly one percentage point of Apple’s overall 10% revenue growth came from consumers advancing their purchases in anticipation of potential tariffs.
Mac Sees Fastest Growth Among Units
While the iPhone led in absolute revenue, Apple’s Mac segment posted the fastest growth rate, climbing nearly 15% to $8.05 billion. The bump followed the company’s release of new MacBook Air laptops — its best-selling model — just ahead of the quarter.
Services, Apple’s second-largest segment, rose 13% to $27.42 billion, bolstered by growth in iCloud subscriptions and double-digit increases in App Store revenue. This area includes content subscriptions, warranty sales, licensing deals with Google, and cloud services. Apple’s gross margin for the quarter came in at 46.5%, higher than the 45.9% estimate.
Weak Spots in iPad and Wearables
Not every category recorded gains. iPad revenue fell 8% to $6.58 billion despite a new budget iPad model launched in March. Meanwhile, the wearables division — which includes Apple Watch, AirPods, and accessories — saw sales decline 8.64% to $7.4 billion.
The “Other Products” category also missed Wall Street’s forecast, signaling weakening demand in Apple’s accessory and wearable lines even as its core businesses gained momentum.
China Bounces Back
In a notable shift, Apple reported a 4% increase in Greater China revenue to $15.37 billion, after two consecutive quarters of year-over-year declines. Cook attributed part of the rebound to government subsidies that applied to some Apple devices.
“The subsidy does apply to some of our products, and it clearly helps,” he said.
That recovery in China is significant given earlier reports of intensifying competition from Chinese smartphone makers and waning local demand.
Tariff Costs and Outlook
Cook disclosed that Apple incurred $800 million in tariff-related expenses during the June quarter, lower than its prior estimate of $900 million. For the September quarter, Apple anticipates costs of about $1.1 billion, assuming no changes in U.S.-China trade policies.
Despite this, Apple expects mid- to high-single-digit increases in overall revenue and services revenue growth similar to this quarter’s 13%. Gross margins are projected to remain strong, between 46% and 47%, even accounting for tariff expenses.
A Pivot to AI
The report also highlighted Apple’s increasing investment in artificial intelligence — a space where it has trailed rivals like Google, Microsoft, and Amazon in public announcements. At June’s Worldwide Developers Conference (WWDC), Apple’s AI announcements received a lukewarm reception from investors, but Cook attempted to reframe that narrative during the earnings call.
“We are significantly growing our investments,” he said. “We’re embedding [AI] across our devices, across our platforms and across the company.”
Cook also disclosed that Apple has acquired “around seven” companies so far in 2025, although none of the deals were major in terms of cost. He emphasized Apple’s openness to mergers and acquisitions that can accelerate its product roadmap.
Asked whether emerging AI devices — such as those being built by OpenAI — might eventually compete with or replace the iPhone, Cook downplayed the threat.
“It’s difficult to see a world where iPhone is not living in it,” he said, suggesting such devices would more likely complement than displace Apple’s flagship product.
With $133 billion in cash reserves and several growth levers still active — from services to Macs to AI — Apple appears to be entering its final fiscal quarter of the year with renewed momentum.
