Why did Apple shares drop despite a stellar earnings beat

Apple reported stronger-than-expected fiscal third-quarter results, beating Wall Street estimates on both revenue and earnings. Revenue rose 16.4% year-on-year to $109.4 billion, while earnings per share came in at $2.02, marking Apple's strongest June quarter on record. According to Reuters, solid demand for iPhones and Macs helped drive the upbeat results. (Sources: Reuters, CNBC, EBC Financial Group)

The iPhone remained Apple's biggest growth engine during the quarter. iPhone revenue surged 21.7% to $54.25 billion, comfortably exceeding analyst expectations as premium models continued to attract strong demand. Mac sales also climbed 28.7%, reflecting healthy consumer and enterprise demand for Apple's latest computers, Reuters reported.

Despite the impressive earnings beat, Apple shares declined in after-hours trading as investors focused on the company's guidance. Apple forecast 9%-11% revenue growth for the current quarter, below analysts' expectations of around 12%. Reuters also reported that management warned about supply constraints for advanced chips, raising concerns over the pace of future growth.

Apple's services business continued to grow, with revenue rising 12.1%, but the increase fell short of Wall Street estimates. Revenue from Greater China climbed more than 22%, though it also missed expectations. Meanwhile, iPad sales declined during the quarter, highlighting uneven performance across Apple's product lineup, according to Reuters.

Looking ahead, investors are watching whether Apple can overcome supply bottlenecks affecting key products and maintain its recent growth momentum. The market is also focused on the company's artificial intelligence strategy, including upcoming Siri enhancements, as competition among major technology companies intensifies. Reuters noted that Apple's ability to sustain double-digit growth and protect margins will remain key factors for the stock.