Tech stocks have been on a roller coaster this week. First, it was Microsoft and Meta, whose stock prices surged and plunged, respectively, after the companies announced their most recent quarterly results.
Now it’s Apple’s turn.
The iPhone maker’s stock price is down significantly after reporting its third-quarter 2026 results. However, those results were, by nearly all accounts, stellar. Apple had its best Q3 on record.
So, why is the stock dropping? Here’s what you need to know.
What’s happened?
Yesterday after market close, Apple Inc. (Nasdaq: AAPL) reported financial results for its third quarter of fiscal year 2026. The company exceeded most major metrics with ease, and, as a matter of fact, Apple recorded its best Q3 ever.
For the quarter, Apple reported revenue of $109.4 billion, up 16% year over year, the company’s highest Q3 revenue ever.
Gross margin—the profit Apple makes from selling its products—was also strong at 50.1%. It also achieved a diluted earnings per share (EPS) growth of 29% year over year to $2.02 (helped by tariff refunds that added 11 cents per share). Apple’s year-ago EPS was just $1.57.
And Apple didn’t just post significant growth; the company also beat expectations in many metrics.
As noted by CNBC, analysts were only expecting $108.65 billion in revenue. Apple beat that by around $750 million. The company also beat on iPhone, Mac, and wearables revenue.
Yet still, the company’s stock price has dropped significantly in premarket trading this morning after Apple reported its Q3 results. Here are three of the most likely reasons why.
Profit-taking
AAPL shares have been on an incredible run as of late. As of yesterday’s closing price of $333.43, Apple’s stock price has increased more than 15% in the last four weeks alone.
Over the past six months, the company’s stock has gained more than 28%. And just this week, Apple crossed the $5 trillion market capitalization mark for the first time ever, and once again became the most valuable company in the world (dethroning Nvidia).
That kind of stock run often leads to profit-taking, as shareholders sell off the stock to lock in recent gains.
When enough shareholders take their profits, the stock inevitably sinks. Profit-taking is a fairly common event for Apple after it reports good quarterly results.
Weaker-than-expected services revenue
But profit-taking doesn’t seem to be the only reason for AAPL’s decline this morning. While the company had many bright spots for the quarter, it did have one particularly disappointing metric: that of its Services division.
Apple’s Services encompass its own-branded subscription services, like Apple TV+, iCloud+, Apple One, and more. It also includes Apple’s cut of the revenue generated by subscription services that third-party apps sell to users through Apple’s App Store.
After the iPhone, which generated $54.25 billion in revenue for Apple this quarter, the company’s Services division is its second-largest money-maker. In Q3 2026, Apple reported services revenue of $30.74 billion.
While that number represented more than 12% year-over-year growth, and Apple announced it now had 1.5 billion paid subscriptions (up half a billion from just three years ago, notes 9to5Mac), the company’s services revenue also came in below the $31.22 billion that most analysts expected, CNBC reported.
Furthermore, Apple said that government-mandated changes to the App Store in various regions around the world impacted revenue. Such changes include some countries mandating that Apple allow developers to use payment methods outside the App Store for in-app purchases.
Given how large a slice of the total revenue pie Apple’s Services division accounts for, investors may be concerned that future regulations could affect the company’s Services revenue even more.
Weaker-than-expected Q4 guidance
The final big factor likely spooking Apple investors today was the company’s guidance for its Q4, which it is in right now and ends in September.
Apple’s chief financial officer, Kevan Parekh, told analysts that the company expects revenue growth of 9% to 11% in Q4. While that’s definitely an improvement from last Q4, it’s also lower than the 12% most analysts were expecting, notes Reuters.
Parekh also said that Apple expects its all-important iPhone revenue to take a hit from “supply constraints” (aka: the AI-fueled memory and chip shortage) and “foreign exchange headwinds.”
As of the time of this writing, in premarket trading, AAPL stock is currently down about 7.7% to $307.75 per share. The company’s stock traded at an all-time high of $344.57 just days ago.