Apple Reports $109.4B Q3 Revenue Amid AI Server Rumors
Apple posts record iPhone sales and expanding margins in Q3, while reports suggest a 2029 entry into enterprise AI inference servers.
Key points
- Apple revenue rose 16.4% to $109.4 billion in fiscal Q3 2026, with iPhone sales hitting a record $54.3 billion.
- EPS increased 29% to $2.02, supported by a 50.1% gross margin that benefited from U.S. tariff refunds.
- Reports indicate Apple is building an M8 Ultra-based AI server for inference, potentially launching in 2029.
Apple delivered its strongest June-quarter performance to date in fiscal Q3 2026, with revenue climbing 16.4% to $109.4 billion. The company reported earnings per share of $2.02, a 29% increase year-over-year, while net income rose 27.1% to $29.8 billion. These figures were driven by robust hardware demand and favorable accounting adjustments that boosted gross margins.
Concurrently, reports surfaced that Apple is developing an in-house AI server based on future M8 Ultra chips. According to Yahoo Finance, the project could leverage NVIDIA's NVLink Fusion technology to connect processors, marking a potential return to the enterprise market after the Xserve line was discontinued in 2011. The initiative remains in the development phase and is not expected to reach the market until 2029.
Hardware Segment Leads Revenue Growth
The iPhone segment served as the primary growth driver, with revenue surging 21.7% to $54.3 billion. This represents the highest sales figure for a June quarter in the company's history. Mac revenue also expanded significantly, jumping 28.7% to $10.4 billion, fueled by strong consumer demand for new MacBook models.
In contrast, iPad revenue declined 5.9% to $6.2 billion, showing a slight contraction in that specific product line. The overall hardware strength supported the company's ability to maintain high profitability despite mixed performance across individual device categories.
Services Misses Expectations On Gaming Weakness
Apple's Services business generated $30.7 billion in revenue, a 12.1% year-over-year increase that fell short of analyst expectations. Management attributed the underperformance primarily to weaker spending in mobile gaming. This segment remains a critical focus for the company's long-term margin expansion and recurring revenue model.
AI Server Project Targets Inference Workloads
The reported server initiative is designed specifically for AI inference workloads rather than large-scale model training. This strategic focus suggests Apple aims to support developers, businesses, and government customers with on-device or localized processing capabilities. The project would extend the company's in-house silicon strategy beyond consumer devices into enterprise infrastructure.
While the timeline points to a 2029 release, the project remains subject to change or cancellation. Investors are currently weighing this potential expansion against the stock's premium valuation, which trades at 38.09 times forward earnings. The development provides a long-term catalyst for Apple's growth narrative as it continues to build out its AI capabilities.
