In his final earnings call as CEO, Cook said he has never been more optimistic about the opportunities ahead for Apple. “I am beyond excited,” said Cook, who has led the company for 15 years and will pass the CEO baton to John Ternus in September. But Cook’s confidence in the future stood in contrast to the picture that he and other executives painted of current business conditions. 

“We’re seeing some very significant constraints currently, with limited flexibility in the supply chain,” Cook said. “There’s a quarter where we’re going to be scrambling on the supply side,” he acknowledged at another point. 

The supply crunch is making it more difficult for Apple to obtain the advanced processors it needs for its phones and computers. And that translates into lower revenue. 

Sales of the iPhone, which accounts for roughly half of Apple’s business, will grow at a “mid-teens” percentage rate in the current quarter, Apple said, forecasting a significant deceleration from the 22% growth the iPhone business posted in the recently ended quarter. Total revenue in the current quarter will grow between 9% and 10% year over year, which was below the 12% rate expected by analysts.

Gross profit margins, which came in at 48% of revenue (excluding the benefit of tariff refunds) in the most recent quarter, will come under pressure in the current quarter, Apple said. 

Shares of Apple fell as much as 8% in after-hours trading on Thursday following the earnings results, before regaining some ground, with the stock later trading down roughly 6% from its closing price of $333.85. 

Apple, the world’s most valuable company (market cap $4.9 trillion), has been one of the best performers among Big Tech stocks this year, with its shares up 23% in 2026. While Apple has been late to the AI game and struggled to develop its own AI models, investors have come to appreciate that the company is not locked in the AI infrastructure arms race that has swelled capital expenditures at Meta, Google, Microsoft, and Amazon. 

Last week, Google parent company Alphabet’s stock plunged 7% after it raised its capex forecast for the year to above $200 billion and reported its first-ever negative free cash flow. Meta’s stock took a similar drubbing this week. 

While Apple is not spending hundreds of billions in capex, its business is still feeling the effects of the AI arms race, specifically when it comes to memory chips. The demand for memory chips in the data centers being built to power AI is causing a shortage and sending prices skyrocketing. 

In June, Apple was forced to raise prices for its Macs and iPads to account for the increased cost of memory chips. “We did it because we’re in what I would characterize as a 100-year flood on the memory pricing,” Cook said on Thursday’s earnings call.

He lamented that the DRAM memory chip market is essentially owned by three companies: Micron, SK Hynix, and Samsung. “If there were more suppliers that would be good. It would help us on  the supply side, and perhaps the pricing side,” Cook said, adding somewhat cryptically that Apple is “evaluating all options.”

Asked about Apple’s AI offerings, including the upcoming Siri AI, Cook said the company saw an opportunity in running more AI directly on users’ devices, an approach that Apple believes can appeal to privacy-minded users. “The ability to run some percentage of requests on-device is also very strategic, sort of a competitive weapon if you will,” Cook said. 

But he also noted that AI capabilities could lead to an increase in users of Apple’s iCloud offering—a potential boost to Apple’s Services business, its second largest business unit, with $30 billion in revenue last quarter.

Apple’s overall revenue in the three months ended June 30 totaled $109.4 billion, up 16% year over year, and roughly in line with analyst estimates. The company posted net income of $29.8 billion, or $2.02 per share, versus the $1.89 EPS expected by analysts. Apple said that roughly 11 cents of the EPS was attributed to a refund from President Trump’s tariffs. 

As for incoming CEO John Ternus, though he was present for the earnings call, delivered prepared remarks and was not made available for the Q&A portion. That didn’t stop one analyst from trying for a response. 

The analyst wanted to know: How does Ternus view the competitive landscape, especially at a time when new competitors like SpaceX and OpenAI could be preparing to offer AI-powered hardware devices that would compete with Apple?

“I would just reiterate what Tim said,” Ternus noted. “There is so much opportunity for us, with everything that’s happening in the space. We’re just really focused on our plans, and really excited about it.”