Apple shares slide as higher memory costs fuel margin concerns
“Apple shares fell about 4% 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 unc…”
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 i. Phone 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% 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% and 46%, which also reflects the expenses tied to the ramp-up of its AI-powered Siri. Read More:AI models mostly smarter than top scientists, OpenAI's Altman says.
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The CEO comments imply "Apple products are going to become even more expensive, which is not ideal at a time when the consumer is feeling the pinch from a higher cost of living," said Dan Coatsworth, head of markets at AJ Bell. However, Apple reported a record September quarter for i.
Phone revenue despite price increases and a staggered i. Phone release schedule where only the premium 18 Pro models were launched in the last days of the company's fiscal 2026. Fourth-quarter i.
Phone sales, which included i. Phone 18 Pro models but not Duo, were $57.58 billion, above estimates of $56.54 billion,. "We see the flagship i.
Phone as the linchpin of this ecosystem, from which Apple derives pricing power, switching costs, and a network effect," said William Kerwin, senior equity analyst at Morningstar. Apple is set to lose over $170 billion in market value from its $4.94 trillion valuation if losses hold.
The stock trades at nearly 35 times expected earnings over the next 12 months, compared with 18.23 times for Alphabet and 23.43 times for Microsoft.
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