Analysis
Apple Beat, Then Fell 3% on a 45%–46% Margin Guide
Apple's fiscal fourth-quarter revenue rose 12% to $114.5 billion, above forecasts, but gross margin guidance of 45% to 46% for the December quarter sent the shares down about 3% after hours.
John Ternus's first quarter as Apple's chief executive was a clean beat with an uncomfortable outlook attached. For the three months to September 26, Apple reported revenue of $114.48 billion, up 12% from $102.47 billion and above the $113.39 billion analysts expected, and earnings of $2.10 a share against a consensus near $1.99, of which about 5 cents came from tariff refunds. Net income rose to $30.71 billion from $27.47 billion, and revenue for fiscal 2026 as a whole reached about $478.8 billion, up 15%.
The product lines told a mixed story. iPhone revenue rose 17% to $57.58 billion, ahead of the $56.54 billion forecast, and the Mac grew almost 24% to $10.79 billion. Services, the high-margin business investors pay up for, brought in $31.57 billion, a hair under the $31.58 billion expected, and grew less than 10% for the first time since September 2022, according to SiliconANGLE. iPad revenue fell more than 10% to about $6.2 billion, which Ternus put down to supply constraints. The quarter's gross margin was 47.9%, including about a point from tariff refunds.
The guidance changed the tone. For the December quarter Apple forecast revenue growth of 7% to 10%, with services up 8% to 9%, and a gross margin of 45% to 46%, roughly two points below the quarter just reported. SiliconANGLE put analysts' growth expectation at 11.4%. Memory is the obvious suspect: in July Apple had already warned of what Tim Cook called "a 100-year flood on the memory pricing", as DRAM and flash makers sell everything they produce to AI data centres, and the iPhone Duo, priced from $1,999 and back-ordered into January, is a memory-hungry device.
The shares had already fallen 1.83% in the regular session to $338.32 as the AI-led sell-off spread. After the release the stock first rose, then turned lower once the outlook was discussed on the call: Binance's tokenised Apple swung between $348.11 and $323.48 in the hour that followed, and Nasdaq after-hours trades ended the evening at $328.81, about 2.8% below the close. That leaves the stock below Friday's low of $334.35, the level that had marked the floor of last week's sell-off.
The quarter itself raises no doubts about demand; the outlook raises one about how much of that demand Apple can keep as profit. With the stock still up more than 24% this year, about twice the S&P 500's gain, investors were paying for both. A margin guide that holds near 46% while memory prices keep rising would look conservative by January; one that slips again would make this the second quarter in a row in which Apple sold more and kept less.