It's hard to poke holes in an earnings report for a company that showed a record second-quarter profit, a 27 percent rise in revenue, and one of the largest dividend increases in the history of capital markets.
But investors apparently found some issues with Apple on Tuesday morning, as the stock price declined more than 1 percent at one point.
Here are Wall Street's biggest concerns:
1. iPhone profit margins not as high as expected
Apple's overall gross margin inched higher to 40.8 percent in the quarter from 39.3 percent a year ago. But that total margin will decrease next quarter, according to Apple's own guidance, and the deterioration in iPhone 6 profitability could be even worse.
This seemed to be the most-mentioned concern from analysts Tuesday morning.
Here's Jefferies' Sundeep Bajikar, who rates Apple "hold":
"iPhone shipments of 61.2m (Street 55m, JEF 60m) were higher than expected, but iPhone ASPs (Averge Selling Prices) of $659 (Street $653, JEF $685) suggest FQ2 iPhone 6/6+ mix was worse than our 50/50 assumption. Guidance for FQ3 revenues of $47B was in line with the Street estimate, and confirms iPhone is likely to decelerate YoY, as expected."
2. iPhone 6 sales growth will slow
It's the law of large numbers, but also due to seasonal factors and the natural progression of any product cycle.
From Pacific Crest's Andy Hargreaves, who rates Apple a "sector weight."
"Despite the extraordinary performance of iPhone 6/6+, FQ3 (June) guidance was slightly lower than we expected (even accounting for conservatism), which suggests estimates may have caught up to iPhone strength. More importantly, consensus estimates appear to anticipate F2016 iPhone, iPad and Apple Watch unit sales that are at the high end of or above what we believe is likely, which suggests our expectations are meaningfully low or new categories are needed to make up the difference."
3. Apple may not be sandbagging forecast. It could be bad.
More from Hargreaves:
"FQ3 revenue Guidance is below our expectation, even allowing for sandbagging. Our FQ3 revenue estimate of $50.5 billion is $2.5 billion above the high end of Apple's guidance range of $46 billion to $48 billion. This is clearly within range given that the company has exceeded the high end of its guidance by roughly $2 billion, $8 billion and $3 billion over the past three quarters. However, it does not seem to leave room for significant upside, which is surprising given the strong early demand for Apple Watch and the sustained strength in iPhone through FQ2. If FQ3 results come in line with our estimates and well above guidance, it may signal the end of upside from the iPhone 6 cycle, which would likely transition the burden of driving numbers higher onto the Watch for the near to medium term."
4. iPad sales slowing faster than expected
It's gone from one of the fastest-selling consumer electronics products ever to a thorn in Apple's side.
From JPMorgan's Rod Hall:
"iPad unit sales declined by 22.8 percent Y/Y to 12.6m units, below our estimate of 14.7m units. Sell through was better at 13.7m units as the company used up 1.1m units of channel inventory. Management said that the company is within its five to seven week target range of iPad channel inventory — we estimate iPad channel inventory to be ~4.1m units."
5. Stock may now depend on Apple Watch success
From Nomura's Stuart Jeffrey:
"For the next few quarters we believe that the Apple Watch is likely the key driver of any share price upside at Apple. While initial demand appears high, we still believe that the product is a solution in search of a problem and that it will take an extra generation or more to see meaningful adoption (if at all). The disclosure that Apple Watch gross margins are below the firm's average also likely limits the scope for any operating leverage."
—With reporting by CNBC's Michael Bloom
