Apple Falls Post Q3 on Supply Chain Woes: Buy the Dip in ETFs? – July 31, 2026
Key Takeaways
- Apple beat Q3 estimates, but weak guidance sent shares lower.
- Supply constraints and memory shortages cloud Apple’s near-term outlook.
- Apple-heavy ETFs like GXPT, FTEC, TOPT and TRUT are in focus.
On July 30, Apple (AAPL – Free Report) came out with fiscal Q3 earnings of $1.91 per share, beating the Zacks Consensus Estimate of $1.88 per share as well as the year-ago level of $1.57 per share. The company’s revenues of $109.42 billion surpassed the Zacks Consensus Estimate of $108.8 billion and year-ago revenues of $94.04 billion. Revenue growth in the quarter topped 15% for the third consecutive quarter, per CNBC.
Although the stock beat on both the top and bottom lines, its guidance disappointed investors. Apple forecast that sales for the September quarter would grow more slowly than Wall Street expected due to supply constraints in advanced chips and memory, per Reuters. Shares slumped 6.43% in after-hours trading on July 30, reflecting the weaker guidance.
Inside Weak Guidance
Apple expects year-over-year revenue growth of 9%-11% in the ongoing quarter. Before the earnings release, the Zacks Consensus Estimate for September-quarter sales stood at $115.73 billion, representing year-over-year growth of 12.95%.
Apple is grappling with the global memory crunch. The shortage has already forced the company to raise prices for Macs and iPads. While Apple has not increased iPhone prices yet, many analysts expect price hikes as early as this year, as quoted on CNBC.
Apple’s services business rose 12.1% to $30.74 billion, ???missing estimates of $31.22 billion. D.A. Davidson analyst Gil Luria said slowing services revenue in Q3 despite strong iPhone sales has raised investor concerns that services growth could weaken further as iPhone sales normalize, as quoted on Reuters.
What Are the Silver Linings?
Apple is preparing to launch a redesigned Siri powered by Google technology alongside its new iPhone lineup in September. The rollout will serve as a crucial test for the company as investors remain concerned about its position in the artificial intelligence (AI) race, per CNBC.
Demand for Apple products remains strong. Apple CEO Tim Cook told Reuters that the supply constraints stem from a stronger-than-expected product cycle, as the advanced chip supply chain has struggled to keep up with strong demand.
Sales of the Mac lineup surged 28.7% thanks to the entry-level MacBook Neo and the high-end MacBook Pro despite price increases. There was a 21.7% increase in iPhone sales to $54.25 billion, above estimates of $53.86 billion, per Reuters. Apple also delivered record third-quarter iPhone sales, defying the usual pre-launch slowdown.
Apple’s gross margin – a key metric amid pressure from rising memory costs – was 50.1% in Q3. Excluding a two-percentage-point boost from tariff refunds, the gross margin was 48.1%, near the midpoint of guidance and above the consensus estimate of 47.92%, per Reuters.
Rich Valuations Causing Profit Taking?
Apple recently reclaimed the label of the world’s most valuable company. Apple was the most richly valued stock among the Magnificent Seven before its Q3 earnings release. As such, the weaker outlook provides ample reason for the stock’s valuation to correct (read: Apple Shares Rally Ahead of Q3 Earnings: Can It Last?).
Ahead of the earnings release, many feared that Apple’s premium valuation – nearly 40 times trailing earnings – sets a very high bar. Any softer guidance could trigger profit-taking, even if quarterly results meet or beat expectations. Apple shares are up 23% so far this year compared with a 3.3% gain in the AI behemoth NVIDIA.
Apple-Heavy ETFs in Focus
Against this backdrop, investors can play Apple through a diversified ETF approach to minimize company-specific concentration risks. A basket approach minimizes the company-specific concentration risks.
Global X PureCap MSCI Information Technology ETF (GXPT – Free Report) – Apple weight 18.20%
Fidelity MSCI Information Technology Index ETF (FTEC – Free Report) – Apple weight 15.4%
iShares Top 20 U.S. Stocks ETF (TOPT – Free Report) – Apple weight 14.0%
VanEck Technology TruSector ETF (TRUT – Free Report) – Apple weight 13.6%
