Earnings · $AAPL
Apple Shares Slip After Record Quarter as Memory Costs Cloud Margin Outlook
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The iPhone maker beat expectations for the September quarter, but guidance for gross margin of 45% to 46% overshadowed the results.
By Emma Cruz ·
Apple shares fell in early trading on Tuesday even after the company reported record revenue for its fiscal fourth quarter, as investors focused on a forecast pointing to thinner profit margins because of rising memory-chip costs. The stock was down 3.4% as of 9:35 a.m. ET, while the S&P 500 was up 0.2% [1].
In its earnings release on Monday, Apple said revenue for the quarter ended September 26 rose 12% from a year earlier to $114.5 billion, and diluted earnings per share rose 14% to $2.10 [2]. The company said tariff refunds added $0.05 to earnings per share and about one percentage point to its 47.9% gross margin [2]. The Associated Press reported that both profit and revenue came in above what analysts had expected [1].
The segment figures were strong. According to MacRumors' summary of the earnings call, iPhone revenue reached $57.6 billion, up 17% from a year earlier and a record for a September quarter, while Services revenue hit $31.6 billion, up from $28.8 billion [3]. Apple's release also described records for both iPhone and Services, and the board declared a quarterly dividend of $0.27 per share, payable November 16 [2].
The reaction in the shares traces to the outlook. For the December quarter, Apple expects revenue growth of 7% to 10% and Services growth of 8% to 9%, with a gross margin of 45% to 46%, which would be well below the 47.9% it just reported [3]. MacRumors said the company pointed to higher memory costs and costs tied to the ramp of its Siri AI features as pressures on margin [3]. The AP described the same concern, saying Apple expects to earn less profit from each dollar of revenue because memory-chip costs are being pushed higher by demand from AI data centers [1].
Apple executive Ternus described the memory market as "unprecedented" on the call, and the company expects memory costs to climb further in the December quarter and to keep rising beyond it [3]. Price increases in June and September, lower costs for other components and inventory carried in from earlier purchases have offset part of the pressure so far, according to the same summary [3]. Apple also said Mac and iPad supply will be constrained in the December quarter, mainly because of memory, since demand has exceeded its expectations [3].
The move came on a day when the broader market was mixed. The Dow Jones Industrial Average was down 232 points, or 0.4%, and the Nasdaq Composite was up 0.5% at the same 9:35 a.m. ET snapshot, with Nvidia rising 3.1% and acting as the largest upward force on the S&P 500 [1]. The split illustrates how AI-driven demand for chips and memory can lift suppliers while squeezing the consumer-hardware companies that buy those components.
For markets, the question is how long memory prices stay elevated. Apple has said it expects them to keep rising, which means the 45% to 46% margin range will be tested by the actual cost trend rather than by demand, which remains strong by the company's own account. Investors will also watch whether supply limits on Mac and iPad cap revenue in what Apple expects to be its best quarter ever [3], and whether other hardware makers with heavy memory exposure give similar warnings in their own reports.
Sources:
[1] The Associated Press via CP24, "Apple drops with most of Wall Street, but gains for other Big Tech stocks cushion the blow", November 3, 2026. https://www.cp24.com/news/money/2026/11/03/us-stocks-drift-in-mixed-early-trading-on-wall-street-as-apple-falls/
[2] Apple, "Apple reports fourth quarter results", November 2, 2026. https://www.apple.com/newsroom/2026/11/apple-reports-fourth-quarter-results/
[3] MacRumors, "Apple's Q4 2026 Earnings Call Takeaways", November 2, 2026. https://macrumors.com/2026/11/02/apple-q4-2026-earnings-takeaways
This article was produced with AI assistance. It is for informational purposes only and is not financial advice. StockVolt and its authors may hold positions in securities mentioned.