Apple faces $108.9B revenue test in Cook's final earnings call as CEO

Apple Inc. reports fiscal third-quarter results Thursday after the close, with consensus revenue of $108.9 billion and earnings per share of $1.89 — a test of whether the Apple Intelligence upgrade cycle is translating into durable demand during Tim Cook's final earnings call as chief executive.

"The results validate our AI strategy, which avoids the hyperscale capex pitfalls that peers are facing," Jay Woods, chief market strategist at Freedom Capital Markets, said. Apple's capital spending runs at roughly 1.8% of revenue, a fraction of the $75 billion-plus annual outlays at Alphabet, Meta and Microsoft.

Wall Street expects iPhone revenue in the $55 billion to $57 billion range, supported by continued iPhone 17 family strength through the spring selling season. Services revenue — carrying gross margins above 70% compared with roughly 37% for hardware — is projected at approximately $31.4 billion, up from $30.9 billion in the March quarter. Apple's installed base of active devices crossed 2.5 billion earlier this year, the highest in company history.

The report marks Cook's last quarterly call before John Ternus, Apple's hardware engineering chief, succeeds him as CEO on Sept. 1. Cook will remain as executive chairman. The transition comes as Apple navigates the worst memory chip shortage in decades — what Cook described to the Wall Street Journal in June as a "hundred-year flood" — which has already forced Mac and iPad price increases of $100 to $300.

The Memory Cost Squeeze

DRAM contract prices rose roughly 90% in the first quarter of 2026 alone, according to TrendForce, as Samsung, SK Hynix and Micron redirect manufacturing capacity toward high-bandwidth memory used in AI accelerators. The 12-gigabyte LPDDR5X memory package inside an iPhone 17 Pro cost Apple approximately $39; the equivalent component for the iPhone 18 Pro is projected at roughly $145, a 272% increase, per research firm TechInsights.

Apple's own guidance calls for gross margin between 47.5% and 48.5% for the quarter just ended. Thursday's print will show whether the company absorbed the cost shock or began passing it through — and what that signals for iPhone 18 pricing this fall. Analyst estimates of the iPhone 18 Pro price increase range from $50 (JPMorgan) to $270 (TechInsights) above the current $1,099 starting price.

Apple Upgrade Program Launches

Apple on Tuesday launched "Apple Upgrade," a device leasing program with Klarna that replaces the 11-year-old iPhone Upgrade Program. The program offers 24-month terms for iPhones and Apple Watches and 36-month terms for Macs and iPads, with options to upgrade mid-lease or return the device. Entry-level products are excluded, steering customers toward higher-margin mid- and premium-tier hardware.

The program is designed to lower monthly payments as an explicit response to rising hardware prices. Cook and CFO Kevan Parekh are expected to discuss early enrollment signals on Thursday's call.

What to Watch

Services revenue of $31.4 billion or higher would confirm the platform flywheel is sustaining double-digit growth despite EU App Store regulation. Gross margin at or above the 48% midpoint would signal Apple is managing the memory crisis better than feared. Any Q4 guidance implying gross margin materially below 47% would sharpen questions about iPhone 18 pricing and demand elasticity.

Apple shares closed Friday at $333.02, up roughly 22.5% year to date, giving the company a market capitalization approaching $4.94 trillion — reclaiming the title of the world's most valuable public company from Nvidia. The stock trades near its all-time high of approximately $335.75.

The guidance raise or hold will signal whether management expects the AI upgrade cycle to sustain into the fall iPhone 18 launch. Investors will watch the Q4 outlook and Cook's commentary on Apple Intelligence adoption for the clearest directional signal.

This article is for informational purposes only and does not constitute investment advice.