Analysis
Apple's Results Tonight Hinge on Memory Costs
Apple reports after Monday's close with analysts expecting revenue of about $113.4 billion and EPS of $1.99. Margins under memory costs and December guidance matter more than the beat.
Apple's fiscal fourth-quarter report, due after the US close on Monday, November 2, is the first with John Ternus leading the call as chief executive; Tim Cook used the July call to say it was his last. Analysts expect earnings of about $1.99 a share, up from $1.85 a year earlier, on revenue of about $113.4 billion, up roughly 10.6% from $102.5 billion, according to consensus figures compiled by TipRanks and MarketBeat. Apple has beaten earnings estimates in each of its last eight quarters, so a beat on its own would surprise no one.
Apple's own guidance from July frames what counts. It called for revenue growth of 9% to 11%, iPhone growth in the mid-teens, down from 22% in the June quarter, and a gross margin of 47% to 48% including about one point from tariff refunds. Analysts expect iPhone revenue of about $56.5 billion, up 15%, and services above $31.5 billion. The margin is the line to watch: on the July call Cook described "a 100-year flood on the memory pricing", and excluding refunds the guidance implied a slide from about 48% toward 46% to 47%, mostly because of the price of DRAM and flash.
That makes Monday's Asian trading oddly relevant. The memory makers whose prices squeeze Apple's margin are booming: Korea's chip exports rose 259% in October, while Kioxia's flat outlook shows that even suppliers are now arguing about timing. Apple, which spends far less on AI data centres than Alphabet, Amazon or Meta, was spared most of last week's punishment for capital spending; its shares closed Friday at $344.63 after a record close of $348.91 on Thursday, and dipped as low as $334.35 during Friday's sell-off.
The December quarter is where the new products show up. The iPhone Duo, priced from $1,999, went on sale on October 23 after delivery dates slipped to January within minutes of preorders opening, and Counterpoint Research expects about 6 million units this year. Goldman Sachs, which raised its target to $390, expects guidance for low-to-mid single-digit revenue growth, below consensus. Bernstein's Mark Newman noted that Apple's September unit sales fell 9% from a year earlier, while Monness's Brian White, above consensus, warned that "supply constraints persist, and the macro remains treacherous".
Options priced a move of about 4.25% in either direction, according to TipRanks, close to the 7.4% drop after the July report that came despite a beat. With the stock at about 40 times trailing earnings and above the average analyst target, the bar is set by the outlook rather than the quarter: a gross-margin guide near 47% and a credible Duo supply plan would answer the July worries, while a margin below the range would extend last week's tech sell-off into the one megacap that had avoided it.