AAPL: Apple Stock Slides 3% After Ternus’ First Earnings Beat, Holiday Margins Disappoint

Record September-quarter sales couldn’t overcome warnings about rising memory costs and slower services growth.

🍎 Apple beats estimates, shares lose ground

• Apple shares AAPL fell as much as 4% during Monday’s earnings call, before trimming the after-hours decline to roughly 3%. Quarterly results initially steadied investors, but management’s holiday outlook changed the reception.
• Fiscal fourth-quarter revenue rose 12% to $114.5 billion, while earnings increased 14% to $2.10 a share. Both exceeded Wall Street forecasts for John Ternus’ first quarterly report.
• Tariff refunds contributed $0.05 to earnings per share, although profit still beat the cited $1.99 consensus when that benefit was excluded.
• iPhone revenue reached $57.6 billion, above LSEG’s $56.6 billion estimate, supported by early iPhone 18 Pro demand and higher prices.
• The figures exclude the foldable iPhone Duo, which launched after the quarter ended, leaving its contribution for the crucial December reporting period.

💾 Memory costs squeeze holiday expectations

• Apple, the world’s largest company today, forecast December-quarter gross margin of 45%–46%, down from 47.9%. Gross margin measures sales remaining after product and service delivery costs.
• Higher memory prices account for most of the expected decline, with Siri AI rollout expenses adding pressure. The holiday lineup comes with a larger bill.
• Services growth is also expected to slow. Apple projected an 8%–9% increase for the December quarter, below analysts’ 10.7% forecast.
• Services provide recurring revenue alongside hardware sales, making weaker guidance another obstacle to an enthusiastic response despite the quarterly earnings beat.
• The quarter’s margin received temporary help from tariff refunds, worth around one percentage point. Apple still generated about $28 billion in operating cash flow and returned a similar amount to shareholders.

🔎 China and new products shape the next test

• Greater China revenue reached $17.6 billion, below Bloomberg consensus of $18.8 billion. Mac sales offered a brighter counterpoint at $10.8 billion, exceeding expectations.
• The uneven performance leaves investors watching whether holiday demand can broaden beyond the strongest product categories and regions.
• Apple expects December-quarter revenue growth of 7%–10%, potentially producing its largest quarterly sales total yet. Management said that outlook reflects constrained supply.
• The iPhone Duo adds opportunity alongside execution risk. Apple reported strong initial demand but acknowledged supply constraints and replacements for a small number of units with display problems.