In his debut earnings report as chief executive, John Ternus revealed that gross margins are projected to decline to between 45 percent and 46 percent in the December quarter. The compression comes as Apple exhausts its reserves of lower-priced memory amid an unprecedented spike in component costs. However, fourth-quarter iPhone sales remained resilient, hitting a record $57.58 billion to outperform Wall Street expectations following the late launch of iPhone 18 Pro models.
Key points
Apple's premium valuation of nearly 35 times forward earnings faces heightened scrutiny c…: Apple's premium valuation of nearly 35 times forward earnings faces heightened scrutiny compared to peers Microsoft and Alphabet.
Chief Executive Officer John Ternus expects unprecedented memory price increases to squee…: Chief Executive Officer John Ternus expects unprecedented memory price increases to squeeze profitability well past the December quarter.
Growing expenses from memory hardware and AI-driven Siri development could eventually lea…: Growing expenses from memory hardware and AI-driven Siri development could eventually lead to higher retail prices for consumers.
Sources checked by our analysis pipeline: 1
Nov 3 : Apple shares fell about 4 per cent in premarket trading on Tuesday after the tech giant warned that rising memory costs would squeeze gross margins, stoking investor concerns over persistent supply-chain uncertainties and mounting AI expenses.
John Ternus delivered his first earnings report as Apple CEO on Monday, describing the memory-pricing environment as "unprecedented" while expecting costs to rise beyond the quarter ending in December.
The iPhone maker has benefited from using memory purchased at lower prices, but that advantage is expected to diminish over time, leaving more of its purchases exposed to higher prices.
Gross margins, which measure the percentage of revenue retained after the costs of making its products, was 47.9 per cent for the September quarter, down from June-quarter levels even when factoring in the impact of tariff refunds.
Apple expects gross margin for the December-ending quarter to range between 45 per cent and 46 per cent, which also reflects the expenses tied to the ramp-up of its AI-powered Siri.
The CEO comments imply "Apple products are going to become even more expensive, which…
Early trading reveals divergent momentum across major tech and platform names prior to the opening bell. While prominent technology heavyweights encounter downward pressure, select gig-economy and digital marketplace equities are demonstrating strong upward trajectories. Investors are actively repositioning their portfolios across these distinct corporate assets ahead of the regular session.
Financial analysts are scrutinizing the tech giant's operational balance sheet as conflicting performance drivers emerge across key business units. While customer demand continues to bolster device sales, emerging pressures threaten to temper overall profitability. Market observers remain focused on whether sustained device momentum can sufficiently counter rising obstacles in other core revenue channels.
Market participants are driving a sharp upward movement in the company's equity value during current market hours. This unexpected rally has quickly captured the attention of investors monitoring trading patterns across the sector today. The sudden momentum marks a noticeable shift in the stock's performance.