Apple poised for strongest June-quarter sales growth in 5 years

• iPhone sales are expected to increase 20.8% in the April-June quarter, the strongest third-quarter growth since 2021, as Apple maintained pricing while rivals passed chip shortage costs to consumers
• Profit growth is projected to slow slightly to 18.1% as gross margin slips to 47.9% from 49.3% in the previous quarter, but analysts expect demand to remain resilient even if prices increase later this year
• Apple's restrained AI datacenter spending and focus on its core products helped it reach a $5 trillion market cap, outperforming 'Magnificent Seven' peers as investor doubts grow about Big Tech's AI return on investment

Apple Poised for Strongest June-Quarter Sales Growth in 5 Years

Apple is set to report its strongest June-quarter sales growth in five years, driven by its strategic decision to keep iPhone prices unchanged amid industry-wide cost pressures. The company expects revenue to rise 15.5% to $108.65 billion for the April-June quarter (fiscal Q3), marking the strongest third-quarter performance since 2021.

Key Performance Indicators:

• iPhone sales likely surged 20.8%, the strongest third-quarter growth since 2021
• Profit growth expected at 18.1%, though gross margin is projected to slip to 47.9% from 49.3% in the previous quarter
• Mac revenue growth anticipated to improve to 8.7% from 5.7%
• iPad sales expected to moderate slightly to 5.2% from 8%

Strategic Context:

Apple maintained iPhone pricing while competitors passed on elevated costs from memory and storage chip shortages caused by AI datacenter buildouts. This strategy helped iPhone shipments grow 3% while industry shipments fell to 13-year lows. However, the company did raise prices on iPads and MacBooks last month, plus recently increased Apple Music and Apple One subscription pricing.

Market Impact:

Apple's restrained AI spending approach—avoiding the massive datacenter investments made by peers—has been rewarded by investors. The company reclaimed its position as the world's most valuable company from Nvidia, briefly hitting $5 trillion market value on Tuesday. Its stock has significantly outperformed other "Magnificent Seven" tech giants as investors question Big Tech's AI return on investment, exemplified by Alphabet's recent announcement of its first-ever spending cut.

Analysts expect Apple to raise iPhone prices when launching its next series in September, though Morgan Stanley notes iPhone demand has proven relatively inelastic, suggesting limited impact from price increases.