Apple (AAPL) Q3 FY26 earnings call: guidance and Q&A

How much of the September quarter growth deceleration (9-11% vs. June's 16%) is due to supply constraints versus FX, and what are the specific supply constraints impacting iPhone, Mac, and iPad?

Kevan explained the deceleration is due to a 2.5 percentage point sequential FX headwind and significantly increasing supply constraints. Tim clarified that constraints are primarily on advanced SoC nodes, driven by demand for iPhone and Mac exceeding expectations, not a regular supply issue.

“The projected supply constraints in the September quarter, as Kevan said, affect iPhone, Mac and iPad. And so we're seeing some very significant constraints currently with limited flexibility in the supply chain to remedy it.”

asked by Amit Daryanani · answered by Timothy Cook

Given staggering memory inflation, is Apple seeking greater sourcing flexibility to ensure supply, mitigate inflation, or preserve customer value proposition?

Tim confirmed memory costs increased significantly in June and are expected to be even higher in September. He noted the DRAM market has three main suppliers and that more suppliers would help with supply, and potentially pricing. Apple is evaluating all options.

“The second is we're expecting lower cost on certain non-memory components that are in our BOM. And then if you look beyond September, we see the market pricing for memory continuing to increase, which could drive an increasing impact on our business, and we're continuing to evaluate this.”

asked by Amit Daryanani · answered by Timothy Cook

What are the expected adoption rates for the new Apple Upgrade program across the 2.5 billion installed base, and will it shorten replacement cycles for iPhone, Mac, or iPad?

Tim explained the program aims to make it easier for customers to get the latest products via leasing, leveraging Apple's high residual values. It's currently offered only in U.S. retail stores, and early feedback is positive, but it's too early to quantify adoption or impact on replacement cycles.

“And so we'll see what the customer uptake is, but the early feedback on it is quite positive.”

asked by Michael Ng · answered by Timothy Cook

What are the learnings from the iOS 27 and Apple Intelligence public beta, will Siri AI drive holiday demand, and how does usage inform compute costs and iCloud Plus monetization?

Tim expressed extreme excitement about Siri AI, citing overwhelmingly positive feedback from developers, reviewers, and public beta users. He stated it's early for compute costs but anticipates 'upgrade possibilities on iCloud Plus' for heavy users, while emphasizing the product's potential as a demand driver.

“We released it to the public for a public beta a few weeks ago, and the continued feedback is really, really great. I think it's a very big idea to have AI that's private, that's based on your personal context and that's integrated across the operating system.”

asked by Michael Ng · answered by Timothy Cook

Given the September quarter supply constraints, how much will these impact the December quarter, especially since Street estimates already reflect a deceleration?

Tim reiterated that constraints are due to an 'incredibly strong iPhone and Mac product cycle' exceeding expectations, not a supplier issue. Kevan stated that Apple is not providing any color or guidance beyond the September quarter at this point.

“Beyond September, we're not providing any color at this point. You mentioned December, so we're not providing any kind of color or guidance beyond the September quarter.”

asked by Benjamin Reitzes · answered by Kevan Parekh

Is Apple pursuing multiyear LTAs with suppliers for supply access and pricing? What is the philosophy on product pricing – protecting gross profit dollars or gross margins?

Tim stated they 'reluctantly raised prices' due to '100-year flood on memory pricing.' Their pricing philosophy considers units, revenue, and margin to make a 'business judgment' over the long term, rather than a strict mathematical formula focusing on just one dimension.

“In terms of our philosophy on dollars or percentages, we look at units, revenue and margin and then come to a business judgment as to how to handle that. And so it's not a mathematical formula that gets us to a specific result or just looking at one dimension of that.”

asked by Erik Woodring · answered by Timothy Cook

What are the updated thoughts on the Siri AI rollout in China and Europe, and what hurdles need to be crossed?

Tim explained they are working closely with the EU Commission to launch Siri AI there, noting Mac is not covered by the same regulations as iPhone/iPad. For China, they received approval for original Apple Intelligence features (like Clean Up) and are working on the Siri AI rollout, which will require more work.

“If you look at the EU, we're working closely with the commission. Obviously, our complete desire is to launch everything everywhere at the same time. that's always the philosophy that we have. We have not been able to do that in the European Union, but we're working closely with them to try to get to something that would allow us to offer Siri AI there.”

asked by Samik Chatterjee · answered by Timothy Cook