Apple posts record Q3 revenue as analyst confidence in AAPL stock cools
Third-quarter revenue rose 16% to $109.4 billion, but analysts have trimmed 'Strong Buy' ratings citing a 35.7 times forward earnings multiple and expected supply constraints.
Apple has reported a 16% year-on-year increase in third-quarter revenue, reaching $109.4 billion, driven by record sales across its Products and Services segments. Despite the robust financial performance and broad-based growth in every geographic region, analyst enthusiasm for the stock has softened. The number of 'Strong Buy' ratings has declined from 23 to 20 out of 41 analysts covering the stock, according to data cited by Yahoo Finance.
The Products business was the primary contributor to the top-line growth, generating $78.7 billion, an 18% increase from the previous year. iPhone sales accounted for $54.3 billion, up 22% year-on-year, while Mac sales also set new June-quarter records. Apple reported a record number of iPhone upgraders, a key metric indicating resilient demand within its ecosystem.
Services revenue also reached new heights, rising 12% to $30.7 billion. The company recorded revenue records in advertising, the App Store, AppleCare, Apple Music, and Apple TV+. Cloud and payment services achieved all-time highs, supported by a paid subscription base that has surpassed 1.5 billion. Both transacting and paid accounts reached record levels, with double-digit growth observed in emerging markets.
However, Wall Street sentiment has shifted slightly due to valuation concerns and a moderated growth outlook. Apple shares currently trade at 35.7 times forward earnings, a multiple that analysts view as high given an expected fiscal 2027 earnings per share growth of approximately 9%. The consensus rating remains a 'Moderate Buy', but the reduction in 'Strong Buy' opinions suggests some investors believe the current price already reflects much of the company's growth potential.
Near-term headwinds are also influencing analyst perspectives. Apple expects its September-quarter revenue to be impacted by supply limitations across the iPhone, Mac, and iPad businesses. Management forecasts total revenue growth of 9% to 11% year-on-year for the upcoming quarter, a sequential slowdown from the June quarter. While Services growth is expected to remain steady, supply constraints could limit the conversion of strong consumer demand into revenue.
