Apple posted a record September quarter and still saw its shares slide. The reason is one line of guidance: the company expects its profit margin to shrink this holiday quarter, largely because memory chips have gotten far more expensive.
The Numbers
For the quarter ended Sept. 26, Apple reported revenue of $114.5 billion, up 12 percent from a year earlier and above the roughly $113.4 billion Wall Street expected. Diluted earnings were $2.10 a share, up 14 percent. Fortune reports iPhone revenue grew 17 percent to $57.58 billion.
Gross margin came in at 47.9 percent, including about one percentage point from tariff refunds, according to Apple. For the full fiscal year, revenue hit a record $479 billion. Apple also declared a dividend of 27 cents a share, payable Nov. 16 to shareholders of record on Nov. 12.
The Warning
For the holiday quarter, Apple guided to revenue growth of 7 to 10 percent, roughly $153.8 billion to $158.2 billion, compared with about $153.2 billion analysts had expected. But it forecast gross margin of 45 to 46 percent, below the 46.5 percent analysts were looking for.
CEO John Ternus called the memory market situation “unprecedented.” Costs for Siri AI work also weigh on the outlook, Fortune reports. Shares fell as much as 4 percent in after-hours trading, then recovered to about a 2.7 percent decline.
Why Memory Prices Matter to Everyone
Memory chips go into nearly every device, and the AI data center boom has been absorbing supply. Apple is a huge buyer with long-term contracts, so if it is feeling the squeeze, smaller phone, laptop and PC makers are likely feeling it too.
For shoppers, that does not mean a price hike is guaranteed, but it raises the odds that discounts are thinner this season and that new models cost more. Fortune’s report says Apple has raised prices across its product line to offset higher memory costs; check current prices before you buy rather than waiting for a deal that may not come.
What to Watch
Investors will look for whether the margin guidance holds when Apple reports again in late January. The squeeze is also another sign of how AI spending is rippling through the broader economy: our earlier coverage looked at Amazon’s $220 billion spending plan and at the chip-stock slide.
Keep in mind that the results above are Apple’s own figures and a news report’s account of guidance; actual margins will depend on chip prices over the next few months.
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