Apple earnings for the fiscal fourth quarter beat Wall Street forecasts, with revenue of $114.48 billion against an expected $113.39 billion, but shares fell during the earnings call as the outlook for the holiday quarter disappointed investors. The company reported the results on Monday, November 2, in the first earnings call led by new Chief Executive John Ternus.
Profit in the Apple earnings report was $2.10 a share, above estimates of $1.99, even after excluding five cents a share from tariff refunds. Net income rose to $30.7 billion. Gross margin was 47.9%, above the 47.5% analysts had forecast, and that figure included about one percentage point from tariff refunds. The quarter covered product releases in August and September and the change of chief executive from Tim Cook to Ternus on September 1.
Apple earnings led by iPhone and Mac sales
The Apple earnings report showed iPhone revenue of $57.58 billion, above estimates of $56.54 billion and up 17% from a year earlier, a record for a September quarter. The quarter included eight days of iPhone 18 Pro sales. Mac revenue reached $10.79 billion, above estimates of $9.61 billion, and services revenue was $31.57 billion, broadly in line with expectations. Revenue in Greater China rose 21% in the quarter, a quarterly record driven by the iPhone and the Mac.
The Apple earnings call also noted Apple has more than 2.5 billion active devices. Chief Financial Officer Kevan Parekh and Chief Operating Officer Sabih Khan joined Ternus on the call. The executives discussed iPhone Duo sales, Siri artificial intelligence work and rising memory costs, along with supply limits that affected the iPhone, iPad and Mac in the September quarter.
Apple earnings face rising memory costs
Memory costs are the central problem in the Apple earnings outlook. Ternus said memory prices rose compared with the June quarter and described the situation as unprecedented on the call. He said Apple expects even higher memory costs in the December quarter, and Parekh said on the call that Apple expects memory costs to keep rising into next year.
Apple raised prices on selected iPhone 17 models by $100 and increased some MacBook prices, and Ternus said those increases provided some offset, along with carry-in inventory and lower costs on some non-memory components. Khan said purchasing commitments increased by $33 billion during the quarter as Apple worked closely with memory suppliers, although he did not directly confirm a long-term supply agreement when asked about one on the call.
Holiday quarter guidance disappoints investors
The Apple earnings guidance for the quarter ending in December puts gross margin of 45% to 46%, down from 47.9% in the fiscal fourth quarter and below the 46.3% analysts had expected. It expects services revenue growth of 8% to 9%, below the 10.7% analysts had expected. Revenue growth for the fiscal first quarter of 2027 is guided at 7% to 10% from a year earlier, ahead of the 6.1% consensus, so the disappointment was concentrated in margins and services rather than in total sales.
Shares, little changed in after-hours trading after the results, fell 4% during the conference call after executives outlined the weaker outlook, then pared losses to a 2% decline, Reuters reported. The Apple earnings reaction shows investors shifting attention from the quarter Apple had just completed to the margin pressure in the quarter that includes the holiday shopping season, when Apple sells a large share of its annual hardware.
Supply limits and the foldable iPhone Duo
The Apple earnings call also covered supply limits in the September quarter, which were driven by demand combined with limited availability of the advanced nodes used to make the chips in Apple products, Khan said. He said limits on advanced nodes are easing as more of the lineup moves to 2-nanometer chips. The iPhone Duo, the company’s first foldable model, remains supply constrained, Ternus said, with no timeline given for when supply and demand will reach balance.
Reports of cracked screens on the foldable model were also raised. Ternus told Reuters that only a very small percentage of units had been returned for display issues. The company also released new non-iPhone products in the quarter, including its first touchscreen laptops and first smart-home hub, Reuters reported. Research and development spending rose in the quarter as Apple continued work on Siri artificial intelligence infrastructure.