Overall, June results were about 1% better than expectations on average, with some segments falling below plan and others above. The stock traded off 3% when the numbers hit. It’s important to note that shares were up 22% over the past three months, compared with the Nasdaq, which was up 1%. My take: I get investors’ reaction; when the stock has been on a tear, you want a blowout quarter.

Here’s how each segment grew in June year over year vs. the Street:

• iPhone was up 21.7% vs. 21.0%.
• Services were up 12.0% vs. the Street at 14.0%.
• Mac was up 28.7% vs. 8.4%.
• iPad was down 5.9% vs. up 6.1%.
• Wearables were up 6.5%, in line with the Street at 6.5%.

The two keys are that the iPhone and Mac are on fire, which impacted the September quarter guidance.

The September revenue guide of 9–11% fell below the Street at 12%. When a stock is up 22% over the past few months, that update is not what investors want to hear.

While disappointing, I believe it’s not as bad as it looked. In fact, I felt it was a favorable guide if you compare apples to apples.

Doing the math, if not for FX and supply constraints, I believe the September revenue guide would have called for growth of 15% year over year in September vs. the Street at 12%.

Here’s how I get there:

• For September, the Street was at 12% growth.
• They guided 9–11%.
• Cook said supply constraints would increase significantly in September. The “significantly increased supply constraints” will hide what the underlying demand actually is.
• Adding back supply constraints likely adds 2–3% to growth.
• FX will have a 2.5% quarter-over-quarter negative impact on growth.
• Base growth of 9–11%, plus 2.5% FX, plus 2–3% from supply constraints, gets us to around 15% year-over-year growth in September.

More Thoughts On:

Supply constraints. Cook added helpful color about why supply constraints will be more significant in September. He said that iPhone growth of 22% in June and Mac growth of 29% were much better than they expected, so they pulled supply forward into June from September. He continued that “for one quarter, they will be scrambling for supply.” My take: I believe Cook. iPhone growth of 22%—from a segment representing half of revenue—compares with average growth of 3% per year from FY22–FY25. That falls into the “much better” category. As an aside, they guided for June iPhone growth of 17%. I’m not sure what their internal target was. As for the Mac, up 29% in June and accounting for about 10% of revenue, it definitely performed better than the 5% growth we typically see from the segment.

FX. This one is true, and it’s a weak excuse. When FX works in their favor, we rarely hear them call it out as a tailwind. There is no question that it will have a negative impact relative to how analysts were modeling September, but all investors care about is that the numbers are going down.

Going into the June report, I was focused on two new levers: the impact of the price increase and the impact of the rumored shift to releasing the new phones in two batches, one in the fall with the high-end models and the new foldable iPhone, and the second release in the spring.

As for the potential staggered timing change of the new iPhones, my take is that they will move to this model, but I believe the net effect of making the change will be small in September and positive next March. The reason I believe the net effect will be small in September is that the headwind of releasing three new phones vs. typically six will be mostly offset by consumers who normally would purchase the less expensive new iPhones in the fall and need a new phone being forced to pay up for the Pro models. That’s good for ASP. So units will take a hit, but overall revenue should be able to power through it.

As for the price increase on the iPhone: We got the Mac price increase about a month ago, and it’s almost certain we will get an iPhone price bump this September. That dynamic may have been a driver of the strong iPhone sales in June, as consumers know a price increase is coming. That might have pulled some demand from September into June. Setting that factor aside, which I think is small, prices are going up. Apple’s guide reflects that increased price, which, reading between the lines, suggests that they believe the net effect of higher prices and lower demand because of the higher price is small.

When asked on the call how the Siri beta is going, Cook said it has been out for three weeks, that it’s “really, really great,” and that he “could not be more excited about where the product is.” My take: That’s what Tim always says about their new products.

But in this case, we have more information. For the past three weeks, I’ve been a fan of the Siri AI beta. It’s allowed me to find things faster across messages and emails. That alone is a measurable step up in my iPhone’s utility.

While we did not get an update on when the new Siri AI, code-named “Does Apple Have Chops in AI,” will go live for the U.S. user base, we did hear that it will take some time to gain approval in Europe and China. Those two segments, I believe, account for just under 40% of revenue. Cook said they’re making progress, but they’re still at the “front end, with more work to do.” My take: I bet we’re six months away from Siri AI approval in Europe and more than a year away in China. That means any lift in Siri AI revenue will be staggered.

I’ve learned over time: Don’t expect anything on the new product front when it comes to an earnings call. As a point of housekeeping, I’ll mention that the question came up on the call, and Cook said there are other “enormous opportunities for Apple in AI” and that he is “excited about Siri AI, and the ability to run some percentage of requests on device is strategic and a competitive weapon.”

My take: The meat of Apple’s AI opportunity over the next couple of years is the new Siri AI’s ability to power an upgrade cycle and bring in new users because it would be AI that just works. Other new “enormous” opportunities that will be opened up because of inference on device are likely something related to wearables and an AI-first device.

On the non AI front, I believe the rumors that a foldable iPhone, likely priced at $2K, will hit this fall. My expectations for units are low, and it likely won’t move the iPhone growth needle in June, but it could have a small positive impact on growth in December.

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