Apple earnings: record $114.5 billion quarter, but memory costs squeeze margin

The quarter. Revenue was $114.5 billion, up 12% year on year, a record for a September quarter. Gross margin was 47.9%, with about 1 percentage point from tariff refunds. Earnings per share were $2.10, including 5 cents from those refunds. Revenue for the full fiscal 2026 hit a record $479 billion. Apple returned $28 billion to shareholders in the quarter and declared a $0.27 dividend, payable November 16.

By product. According to Reuters, iPhone brought in $57.58 billion and Mac $10.79 billion, both above estimates. Services came in at $31.57 billion, in line. iPad and wearables were below estimates. China sales were $17.54 billion versus $18.58 billion expected, per Visible Alpha. The iPhone number includes the 18 Pro line but not the foldable Duo.

Why the stock did not jump. Shares barely moved right after the release. They lost 4% during the investor call once Apple gave its outlook. It expects gross margin of 45-46% in the December quarter and services growth of 8-9%, while analysts expected 10.7%, per Reuters. The main reason is memory chips getting pricier on AI demand.

What executives said. CFO Kevan Parekh expects memory costs to keep rising into next year. The COO did not confirm a long-term supply deal but said purchase commitments rose by $33 billion in the quarter. Apple plans to raise iCloud+ prices to cover AI costs, with no specific pricing yet. Server-based features, including Siri AI, will have usage limits.

The foldable iPhone. CEO John Ternus told Reuters that Duo is supply constrained and Apple cannot predict when supply and demand will balance. A very small share of units was returned for display issues and is being replaced.

What to check. See the Apple page on Freekonomist: https://freekonomist.com/en/stocks/aapl/ . A results beat does not by itself make a stock cheap or expensive. This is an overview, not advice.

Confirmed facts

• Apple's fiscal Q4 2026 revenue (quarter ended September 26) was $114.5 billion, up 12% year on year.^[1]
• Gross margin was 47.9%, including about 1 point from tariff refunds; EPS was $2.10, up 14%, including $0.05 from tariff refunds.^[1]
• Fiscal 2026 revenue was a record $479 billion; Apple returned $28 billion to shareholders in the quarter; dividend of $0.27 per share payable November 16, 2026.^[1]
• Per LSEG, analysts expected $113.39 billion in revenue and $56.54 billion in iPhone sales; iPhone came in at $57.58 billion.^[2]
• Apple expects 45-46% gross margin in the December quarter and services growth of 8-9%, versus analyst expectations of 10.7%.^[2]
• Shares were little changed after hours, fell 4% during the call, then pared losses to 2%.^[2]
• Mac $10.79 billion, services $31.57 billion, China $17.54 billion versus $18.58 billion expected (Visible Alpha).^[2]
• The CFO expects memory costs to keep rising into next year; purchase commitments rose $33 billion in the quarter.^[2]
• CEO John Ternus: iPhone Duo is supply constrained, with no timeline for supply to meet demand.^[2]

Implications

• ConfirmedThe quarter beat expectations, but the holiday-quarter margin outlook is below the current level.
• ConfirmedRising memory prices are not only Apple's problem: they hit smartphone and PC makers broadly.
• Our readingIf the Duo shortage lasts, some sales may slip into next year. This is our view.

Still unknown

• When Apple can make enough iPhone Duo units
• How much iCloud+ prices will rise
• How long memory prices keep climbing

Who it affects

USA, China, World. People who hold Apple shares or S&P 500 and Nasdaq index funds, and anyone following big tech

Sources

1. Apple: Apple reports fourth quarter results November 2, 2026 · official
2. Reuters: Apple forecasts margin drop in holiday quarter as rising memory costs bite November 2, 2026 · media