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What happened: Apple (AAPL) stock sank 7% on Friday.
What's behind the move: The iPhone maker reported its third quarter earnings on Thursday, beating analysts' expectations on the top and bottom lines on strong iPhone sales, but shares fell after Services and Greater China sales came up short.
Apple posted $109.4 billion in revenue, up 16% from a year ago, as iPhone revenue grew 22% from a year ago, reaching a record in the June quarter.
Apple's Greater China revenue was $18.8 billion, shy of analyst estimates of $19.5 billion.
The company's Services segment, which includes the App Store, iCloud, Apple Music, and subscriptions, brought in $30.7 billion, versus estimates of about $31.3 billion.
Apple's fourth quarter sales forecast also fell short of Wall Street expectations. The company expects revenue to grow 9% to 11%, compared with the consensus estimate of about 12.1%.
More from Yahoo Scout Why did Apple stock fall despite beating earnings expectations? How did Apple's China and Services revenue disappoint investors? Why are analysts concerned about Apple's revenue growth forecast? What impact are rising AI memory costs having on Apple?
What else you need to know: Apple shares pulled back sharply from near-record-high levels after outperforming their "Magnificent Seven" peers. The stock was up roughly 13% year to date.
Part of the enthusiasm surrounding the tech giant has been driven by its relatively restrained approach to AI capital expenditures, compared with other large-cap technology companies.
Still, the Cupertino, Calif.-based company is facing its own AI-related headwind: rising memory and storage costs driven by the global AI infrastructure build-out.
CEO Tim Cook said Apple paid more for memory in each of the past three quarters and expects costs to rise again in the September quarter.
"If you look beyond September, we see the market pricing for memory continuing to increase, which could drive an increasing impact on our business, and we're continuing to evaluate this," Cook said.
That has driven the company to raise prices on its Macs and iPads, though the iPhone has been spared at least for now. Apple is widely expected to boost prices of its next-generation iPhones when it unveils the lineup at its annual showcase in September.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.
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