Apple Fell 8 Percent and Amazon Rose 9 on the Same Night

Apple and Amazon both reported after the close last night and went in opposite directions, which is becoming the pattern of this earnings season. Apple beat and fell as much as 8 percent in after-hours trade. Amazon beat and rose 8 to 9 percent. Neither result was bad. Only one of them came with a forecast the market liked.

Apple's quarter was strong almost everywhere. Revenue up 16 percent to 109.4 billion dollars, net profit up 27 percent to 29.8 billion, helped by tariff refunds after February's Supreme Court reversal of the Trump-era duties. iPhone revenue rose 22 percent to 54.3 billion and Mac 29 percent. Services grew 12 percent to 30.7 billion, which was a small miss and the one line analysts wanted perfect.

The forecast did the damage. Management guided to 9 to 11 percent revenue growth for the September quarter, below consensus, and Tim Cook attributed the ceiling to unexpectedly strong demand rather than weak demand, which is a nice problem to have and a bad thing to say to a market pricing supply risk. The specific worry is memory costs. Apple already raised Mac and iPad prices in June. Memory contract prices rose about 95 percent quarter on quarter earlier this year, and Samsung told its own call yesterday that the shortage worsens through 2027 and into 2028.

So the same shortage that produced a 52 percent operating margin at Samsung is now showing up as a gross margin problem in Cupertino. That is the whole memory story in one handoff. Someone has to absorb the input cost, and it turns out to be the device makers rather than the component buyers of last resort. Apple has the best supply chain in the industry and the deepest pockets to pre-buy with, and it still could not guide past 11 percent.

Amazon had no such argument to make. AWS grew 37 percent, net sales rose 20 percent, and advertising set a record. Cloud growth accelerating at that scale is the cleanest possible answer to the question the market has been asking all week, which is whether the AI capital expenditure is converting into revenue. Microsoft answered it on Wednesday with Azure at 43 percent and rose 7. Meta could not and fell. Amazon could and rose.

This was also Cook's last quarter. John Ternus takes over as chief executive on the first of September and Cook moves to executive chairman, closing out fifteen years. He hands over a company that just grew revenue 16 percent and got sold anyway, on a guide that blamed demand for being too strong.