Instant Reaction: Apple Slides After Supply Shortages Hurt Its Sales Forecast

Summary

Podcast Summary: Bloomberg Intelligence

Episode: Instant Reaction: Apple Slides After Supply Shortages Hurt Its Sales Forecast
Date: July 30, 2026
Hosts: Paul Sweeney, Scarlet Fu (plus contributors: Ed Ludlow, Kunam Goyal, Anurag Rana, Mark Gurman)

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Overview of the Episode

This special “Instant Reaction” episode delivers a rapid, in-depth analysis of Apple’s third quarter 2026 earnings. The discussion centers on headline financial results, the market’s immediate response, and critical questions about Apple’s product outlook and management. Notable contributors include Bloomberg's global tech journalists and analysts who dissect Apple’s performance across product lines, margins, and regions, also providing perspective on leadership and strategic direction.

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Key Discussion Points & Insights

1. Earnings Breakdown and Market Reaction ([02:15]–[04:02])

• Headline Results:

  • Q3 Revenue: $109.42 billion (beat; estimate: $108.85 billion)
  • EPS: $2.02/share (beat; estimate: $1.89)
  • Product Revenue: $78.68 billion (beat; estimate: $77.25 billion)
  • Services Revenue: $30.5 billion (miss; estimate: $31.36 billion)

• iPhone Revenue:

  • $54.25 billion (beat; estimate: $53.6 billion)
  • Apple shares dropped ~2.4% in after-hours trading, despite initial uptick after the numbers crossed.

• Greater China Revenue:

  • $18.82 billion (miss; estimate: $19.58 billion)
  • Noted as a soft spot despite overall regional rebound vs. previous years.

• Immediate Investor Sentiment:

  • Despite broad beats, shares fell, attributed to light service revenue and China miss.
  • Tim Cook calls it “the strongest June quarter ever” in the press release, noting double-digit growth across iPhone, Mac, and services in all geographic segments.

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2. Margin Analysis and Product Performance ([04:18]–[06:26])

• Gross Margin:

  • 50.1% (slightly above expectations); included a 2-point benefit from tariff refunds (an 11 cent EPS gain).
  • Debate whether this is sustainable or a one-off accounting tailwind.

• iPad and Services:

  • iPad missed expectations.
  • Services also missed and is cited as a greater concern due to its strategic importance.
  • Wearables have been weak the past two years but show potential with upcoming AI devices.

• Perspective on Pricing:

  • Apple hasn’t raised smartphone prices notably; analysts debate if and where higher prices are necessary—especially with rising memory costs.
    • “If they can figure out not to raise iPhone lower end prices, it’s going to be very good for them… It’s better to do it on the higher end phones because people… are not sensitive to another few hundred dollars.” – Anurag Rana [05:59]

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3. China and Product Mix: Replacement Story, Not New Growth ([06:26]–[09:07])

• China:

  • Recovery noted from very weak results in prior years, though this quarter’s revenue still missed the mark.
  • Importantly, foldable phones are rapidly growing in China, setting the stage for Apple’s entry.
    • “They’ve totally rebounded there... It’s going to be interesting to see how the foldable iPhone performs there as a status symbol.” – Mark Gurman [07:06]

• iPhone Growth Outlook:

  • Solid quarter expected ahead, but 2027 will bring tougher year-over-year comparisons.
    • “This is not a company you can grow iPhone 22% year after year... This is a replacement cycle story.” – Anurag Rana [06:26]

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4. The Mac and Future Devices: AI Glasses and Vision Pro ([07:39]–[09:41])

• Mac Sales:

  • Smashed expectations, though analysts argue investors may be underestimating its role versus iPhone and iPad.

• Wearables & AI Future:

  • Weakness in wearables attributed to lack of product activity, but “AI glasses” are seen as a future catalyst.
    • “Wearables have been light for a couple of years now... But that is going to accelerate big time over the next three years with these AI devices. Glasses are going to shoot those numbers up.” – Mark Gurman [07:50]

• Apple’s Smart Glasses Strategy:

  • Expected to compete with mid-tier fashion brands, tightly integrated with iPhone.
  • Rollout anticipated as early as June 2027.

• Vision Pro:

  • Effectively deprioritized: “It’s on the back burners of all back burners at this point. There’s a revamped version that’s lighter in development. I don’t anticipate it before the end of ‘28 or early ‘29.” – Mark Gurman [09:43]

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5. Leadership Transition and Strategic Vision ([09:07]–[11:56])

• John Ternus Expected as Next CEO:

  • Gurman predicts Ternus will remain CEO for the next 15 years unless something unexpected happens.
  • “I think it’s going to be the case that we’re always going to carry something in our pocket, the iPhone or something like it is always going to be at the center of everything, and then we’re going to be augmented by glasses, watches, earbuds, you name it.” – Mark Gurman [09:07]

• Strategic Questions Left Unanswered:

  • Gurman would ask Ternus directly about his vision for Apple, growth path, and AI device strategy, but doubts any meaningful answer will be forthcoming.
    • “What is your vision for the future of this company? How are you going to get to this next stage of growth and how are you going to create an AI devices strategy? …He wouldn’t answer that.” – Mark Gurman [11:32]

• Operational Focus:

  • Interest in Ternus’s operational expertise and how Apple will tackle ongoing component shortages (not just by hiking prices).

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Notable Quotes & Memorable Moments

• On China:

  • “They’ve totally rebounded there... It’s going to be interesting to see how the foldable iPhone performs there as a status symbol.” – Mark Gurman [07:06]

• On iPhone Pricing:

  • “If they can figure out not to raise iPhone lower end prices, it’s going to be very good for them. …Better to do it on the higher end phones.” – Anurag Rana [05:59]

• On Vision Pro:

  • “It’s on the back burners of all back burners at this point... They've been heavily prioritizing this glasses push.” – Mark Gurman [09:43]

• On John Ternus’s Vision:

  • “His vision is going to be whatever Tim Cook says the vision is.” – Ed Ludlow [10:35]
  • “He's going to come in and make major changes to the company... He's not going to come on and say he's going to do things differently than his predecessor. He's going to go on and say how incredible Tim Cook has done.” – Mark Gurman [10:49]

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Segment Timestamps

• [02:15] Financial results and fast market reaction
• [04:18] Gross margin analysis, tariff impact, and product line misses
• [05:32] iPhone performance and pricing strategy
• [06:26] Growth prospects, China outlook, and product replacement cycles
• [07:06] Mark Gurman’s take on China and foldables
• [07:50] Wearables, AI devices, and the Mac’s role
• [09:43] Vision Pro and glasses roadmap
• [10:35] Leadership outlook and company vision
• [11:32] Questions for new leadership and AI strategy

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Tone and Style

• Dialogue is rapid, direct, and analytically sharp—typical for Bloomberg Intelligence’s “after the bell” coverage.
• Experts provide numbers-driven observations and candid speculation, with occasional witty banter.

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Takeaways for Listeners

• Despite beating consensus on revenue and EPS, Apple’s earnings left investors cautious due to softness in China and services.
• The future of product growth hinges on AI devices, particularly smart glasses, with Vision Pro fading in priority.
• Apple’s leadership transition remains a subject of speculation—with high expectations for John Ternus’s vision and operational savvy.
• Major strategic questions around growth and AI remain unaddressed, leaving analysts and investors to speculate as Apple’s stock comes off record highs.

Transcript

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[Anurag Rana]

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[Ed Ludlow]

Bloomberg Audio Studios Podcasts Radio News

[Mark Gurman]

this is a

[Host 2]

breaking news update from Bloomberg. Instant reaction and analysis from our 3,000

[Mark Gurman]

journalists and analysts around the world covering Apple.

[Ed Ludlow]

Kunam Goyal with us from Bloomberg Intelligence Anuragrana and as well and Ed Ludlow, host of Bloomberg Tech. So let's get to the numbers. Third quarter revenue 109.42 billion. That's a beat. 108.85 is what the street was expecting. Third quarter EPS $2.02 a share. That is definitely above what the street was forecasting of $1.89 a share. If we go to third quarter products revenue 78.68 billion. That too is better than the street estimate of 77.25 billion. Services revenue 30.5 billion. A little bit light. 31.36 billion. And again we're kind of highlighting here on the Bloomberg what we call our red sticky or red headlines. Third quarter revenue again better than what the street was forecasting. 109.42 billion versus 108.85 billion. We're now getting iPhone revenue as well, Tim.

[Host 2]

Yeah, the headlines crossing fast and furious. IPhone revenue coming in above estimates at $54.25 billion. The estimates for $53.6 billion shares. Apple down about 2.4% in the after hours app declaring a cash dividend of $27 a share. Third quarter Greater China revenue coming in shy of estimates at $18.82 billion. The estimate was for $19.58 billion. Apple shares falling about 2.4% in the post market when these numbers crossed they did shoot higher ever so slightly. You know, watch the after hours carefully and with caution. We haven't heard yet what they're going to say on the call. Very light commentary too as Apple is want to do if in their press release. Just saying that the company is proud to report the strongest June quarter ever with double digit revenue growth across iPhone, Mac and services and in every geographic segment.

[Ed Ludlow]

This is Tim Cook setting June quarter records for both EPS and operating cash flow. Still here with our team. Ed Ludlow, I want to bring you back in here. I know you're just kind of going through the numbers to initial thoughts here. Again we continue to see the stock down about 2 1/2% here in the aftermarket.

[Kunam Goyal]

Yeah, it's a slight beat against consensus or expectations across the board. Other in iPad I see a miss and then in services I see a miss on gross margin coming in at 50.1%. Apple does explain that there was roughly 2 percentage points benefit gross margin from tariff refunds. So we can, we can relitigate that on the accounting side. But EPS therefore includes an 11 cent benefit from those tariff refunds. But that's what I see. You know, Tim summed it up well, the greater China will be a question.

[Anurag Rana]

Right.

[Kunam Goyal]

But I see iPad miss and services miss services more likely to be a concern if it's a miss than iPad maybe, but otherwise strong.

[Ed Ludlow]

Yeah, Mark Gurman is going to join us too for the conversation in a little bit but he's also pointing across gross margin slightly above what Wall street wanted. But again the stock down about 2%. But let's not forget the stock has been on quite a rally so far. This year. What? You're looking perplexed.

[Host 2]

Yeah, I am. I want to bring in Anurag.

[Host 1]

He.

[Host 2]

Anurag, I know that you expected that the string of strong iPhone results would continue this quarter. Next, given the company hasn't raised prices for smartphones, has your view changed at all given what we've seen in the last few minutes with, with. With these numbers coming out?

[Host 1]

No.

[Anurag Rana]

There was a beat on the iPhone number, so that's there. But here is the kicker and I'm looking at gross margins, which was also pretty decent, which was a. Now that's a surprise because you would have the memory price right, your memory process to start hitting. The only place where I see slight hiccup is greater China. So we'll find out what happened there. But it's a very min. Very minor.

[Host 2]

Ms. Anurag, are you saying that Apple doesn't need to raise prices because their margins are intact?

[Anurag Rana]

I hope, see for their sake, if they can figure out not to raise iPhone lower end prices, it's going to be very good for them. I think you have to raise prices first of all because the memory costs are very high. But I think you. And we think it's better to do it on the higher end phones because, you know, people like you are not sensitive to, you know, another few hundred dollars on a iPhone pro max. So it's not going to. That's not going to be the difference.

[Host 2]

Now we can.

[Anurag Rana]

That's another reason why they did that. That's another reason why they did that. So the thing is, I think there is one more good quarter of iPhone coming in, but then things get harder for them next year because then comparisons get tough. This is not a company you can grow iPhone 22% year after year. You know, this is not a brand new product. This is a replacement cycle story. So you could see a little bit of a push for people pulling forward some of these things. But things are going to get hard next year when you get into tougher comparison.

[Host 2]

I want to bring in Mark Gurman. He's with us. Apple shares down in the after hours. Mark is Bloomberg News managing editor for global consumer Tech. You were live blogging while you were on tv.

[Anurag Rana]

Yes.

[Host 2]

What's your take?

[Mark Gurman]

My take is that the iPhone number looks great. My take is that the Mac number looks amazing. My take is that service is a little soft and the China number missed the estimate we have here on the Bloomberg terminal. But at the same time that is, you know, pretty nice growth on an annual basis where they were sort of, I guess, in the toilet in China a couple of years ago and last year. But they've totally rebounded there. It's going to be interesting to see how the foldable iPhone performs there as a status symbol. Well north of two grand. So I think it's going to be a hot product there. Especially because foldables are taking over the smartphone market in China.

[Host 2]

Yeah, I know you're going to buy

[Mark Gurman]

a foldable phone or saying we'll be first in line.

[Host 2]

So is it. So is it the light services in China that's moving the stock lower? I mean, I know stock was 20 up to more than 22% going into this print.

[Mark Gurman]

Yes, yes. I mean, they smashed Mac. Right. But like, I don't think investors have fully grasped the importance of the Mac at this point. I mean, it sort of feels like an afterthought compared to the iPhone and the iPad. The iPad is always light. Wearables have been light for a couple of years now because they haven't really done a ton there. But that is going to accelerate big time over the next three years with these AI devices. Glasses are going to shoot those numbers up.

[Host 2]

Do you think people will buy those?

[Mark Gurman]

I do. I think you'll buy them too.

[Host 2]

Tell me about them.

[Mark Gurman]

Well, they're going. Apple is not going necessarily after the smartphone market. They're looking to create glasses that people want to wear. Just like the Apple watch replaced the traditional watch market. They think that their smart glasses are going to replace sort of the low end to mid tier glasses market. Not the Maison Bonnet of the world, but, you know, the Slr luxotticas of the world. So they're really going to go after those brands. There have cameras built in. I'll do all the stuff that matter does, but a little bit more premium. And Apple E because it'll integrate with your iPhone, whereas they've really held back iPhone integration with the metal glasses over the past couple of years.

[Ed Ludlow]

Do they actually create something that is competitive in terms of share at the company? That moves the needle in terms of the iPhone? Does something else finally come over in terms of contributing more to the bottom line and the top line?

[Mark Gurman]

You know, I think Turner will be CEO for the next 15 years unless again, something goes wrong that we're not expecting. And someone asked me earlier today on one of the programs what's going be the most important product in Turnus tenure and I, to their surprise, said the iPhone. I think it's going to be the case that we're always going to carry something in our pocket, the iPhone or Something like it is always going to be at the center of everything and then we're going to be augmented by glasses, watches, earbuds, you name it. But at some point, there will be a transition to be had. I just don't see it any time in the near future.

[Host 2]

Has Apple given up on the Vision Pro?

[Mark Gurman]

Has Apple given up on the Vision Pro? It's on the back burners of all back burners at this point. There's a revamped version that's lighter in development. I don't anticipate it before the end of 28 or early 29. Could go further back from that because they have been heavily prioritizing this glasses push. Smart glasses with no display. Smart glasses with AR display. They've got a long roadmap of multiple generations ahead of both of those categories. And you'll see them introduce the glasses strategy as early as June of next year.

[Ed Ludlow]

What do you want to hear on the call?

[Mark Gurman]

I want to hear about the memory shortage. I know it's not sexy, but investors are interested in that. I want to hear about Tim Cook's thoughts on how the transition is going. Most importantly, I want to hear Turnus vision for Apple. Are we going to hear that on this call? Are we going to hear that on the next call? Probably not. These guys don't really say anything.

[Host 2]

I'm laughing because, you know, you said earlier, you shared with us earlier about John Ternus and Tim Cook being dressed identically. Like, you know, his vision is going to be whatever Tim Cook says the vision is.

[Ed Ludlow]

Is it going to be. Is it.

[Mark Gurman]

Is that what it's going to be?

[Ed Ludlow]

Yeah.

[Mark Gurman]

No, I think that, I mean, he's going to come in and make major changes to the company. Just like, you know, Steve Jobs, arguably one of the greatest CEOs and visionaries of all time. Tim Cook came in, in there. It's not like he took a wrecking ball, but he shook things up pretty quickly. He was the one who instated the buyback program. He was the one who instated environmental initiatives. He was the one who instated and tons of new product lines. And you can bet Ternus is going to do the same thing. And so we'll see how long that takes. But he's not going to come on and say he's going to do things differently than his predecessor. He's going to go on and say how incredible Tim Cook has done. And even if I do half of what you do, it'll be a success.

[Host 2]

Yeah, $5 trillion market cap, pretty close to it. Expectations were high going into this print. What's the question that if you were to able to ask a question on the call today, what would it be?

[Mark Gurman]

If I were able to answer or ask a question, I would straight up ask Ternus, what is your vision for the future of this company? How are you going to get to this next stage of growth and how are you going to create an AI devices strategy? Well, I mean, the good news is I don't get a question because the bad news is he wouldn't answer that.

[Host 2]

And just I was keeping track. That was three questions.

[Mark Gurman]

Well, you know, I'm a journalist.

[Host 2]

That's what these analysts do too.

[Ed Ludlow]

But if he's not going to answer a question about vision and you kind of know that, where else would you, what else would you want to know?

[Mark Gurman]

I would want to drill down into his operational expertise and get his viewpoint as someone who's not from the operations department, about the memory shortage, how long he sees that running for and what work is going on internally to solve that other than just hiking prices.

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