Apple Revenue Rises 12% to $114.5 Billion as Memory Costs Pressure Margins
Key Facts
Apple reported revenue of $114.5 billion for the fiscal fourth quarter ended September 26, 2026, up 12% year over year and above the average analyst estimate of $113.4 billion. Diluted earnings per share were $2.10, up 14% year over year, compared with estimates of $1.99. The quarter marked John Ternus’ first earnings call as chief executive after he began his tenure in September 2026, and attention centered on the outlook for margins in the next quarter. Shares fell 1.8% to $338.32 at the close of regular trading on November 2, then dropped 2.6% to $329.60 during the earnings call. The decline came despite results for the period topping market estimates, as the company highlighted memory-cost pressures and a lower margin outlook for the December quarter.
iPhone sales reached a September-quarter record of $57.58 billion, above analyst estimates of $56.54 billion. Sales included iPhone 18 Pro models but not Duo, according to Reuters. In Greater China, sales rose 21% year over year during the quarter, marking growth in a key market for the company. Still, sales there came in about $1 billion below Wall Street targets, according to Bloomberg estimates cited by Fortune. The figures put strong phone performance alongside a weaker-than-targeted result in China, leaving demand’s overall direction less clear. Apple’s installed base of active devices also exceeded 2.5 billion by the time of the November 2 earnings call, and executives said that base offers future revenue opportunities.
Fourth-quarter earnings-per-share growth included a positive impact of $0.05 per share from tariff refunds. In the same period, the actual gross margin was 47.9%, but Apple forecast a decline to a range of 45%–46% in the December quarter. The company attributed the decrease mainly to higher memory costs and expenses related to the launch of Siri AI, according to the Associated Press. Ternus said, "What we're seeing now in memory prices is unprecedented," adding that memory purchase prices would continue to rise after the December quarter. The effect of tariff refunds on earnings for the reported period, set against the weaker margin outlook, puts investors’ focus on whether revenue strength can continue to offset rising input costs. Apple also forecast services revenue growth of 8% to 9% in the December quarter, below analysts’ estimate of 10.7%.
For the fiscal year, Apple reported record revenue of $479 billion in 2026, with double-digit growth in earnings per share, according to the company’s statement. The annual performance provides context for the quarterly results, but does not remove the challenges in the outlook for the next period, from a weaker gross margin to services growth below analyst estimates. In China, the company plans to make artificial intelligence features available to iPhone users after reaching an agreement with Alibaba, but the experience will not match the full version of Siri AI. The cost of preparing Siri AI remains one of the factors the company cited for the expected margin decline in the December quarter. The company’s bet on expanding AI features therefore coincides with the need to absorb their rollout costs and memory pressures.
The availability of iPhone Duo presents an additional challenge in the coming period, with Fortune reporting that supply constraints could delay the arrival of new orders until the end of January 2027. Ternus said the company could not specify when supply and demand for the phone would balance. The lack of a clear timeline limits the company’s ability to say when supply can meet demand, according to the chief executive’s remarks. At the same time, Apple said it expects gross margin to decline to 45%–46% in the December quarter from 47.9% in the fourth quarter, while forecasting services growth of 8%–9% against analyst estimates of 10.7%. The outlook combines supply challenges, cost pressure and slower services growth after a quarter in which revenue and earnings per share exceeded expectations.