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Apple Stock: Apple (AAPL) shares fell 8% in early trading Friday.
The drop came a day after the company released its third-quarter earnings report.
Apple beat Wall Street's revenue and profit estimates for the quarter. Strong iPhone sales drove the results.
Still, investors reacted negatively after two key segments missed the mark: Services and Greater China.
Total revenue reached $109.4 billion. That marks a 16% increase from the same period last year.
iPhone revenue climbed 22% year-over-year, setting a new record for the June quarter.
Greater China sales told a different story. Revenue from the region came in at $18.8 billion. Analysts had projected $19.5 billion.
Apple's Services division also fell short of expectations.
The segment includes the App Store, iCloud, Apple Music, and other subscriptions. It generated $30.7 billion, below the projected $31.3 billion.
Looking ahead, Apple's guidance disappointed investors further.
The company forecasts fourth-quarter revenue growth between 9% and 11%. Wall Street had expected growth closer to 12.1%.
Stock Pulls Back After Strong Run
Friday's decline follows a period of outperformance for Apple.
The stock had gained 22% year-to-date through Thursday's close.
That put it ahead of its "Magnificent Seven" peers.
Much of that momentum came from Apple's cautious spending on artificial intelligence.
The company has taken a more measured approach to AI capital expenditures than rivals in the sector.
Even so, Apple isn't immune to AI-driven cost pressures. Rising memory and storage prices, fueled by the global AI infrastructure boom, are creating new challenges.
CEO Tim Cook addressed the issue directly. He said Apple has paid more for memory components in each of the last three quarters.
He expects those costs to rise again in the current quarter.
Cook noted that memory pricing trends beyond September remain a concern for the company.
He said Apple is closely monitoring the situation and its potential impact on the business going forward.
The rising costs have already pushed Apple to raise prices on its Mac and iPad lineups. The iPhone has avoided price hikes so far.
That may not last. Industry watchers expect Apple to raise prices on its next iPhone lineup when it's unveiled at the company's annual September event.
Visual Disclaimer: This is an AI-generated illustrative portrait. It is used for creative representation and does not depict a real-time event. Created by AD News Live.
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