MEMORY ATE THE MARGIN! Apple stock slid about 3% Tuesday after new CEO John Ternus’s first earnings report warned that soaring memory-chip costs will squeeze holiday-quarter profits, CNBC reported.
Apple beat on revenue and earnings Monday — September-quarter revenue hit a record $114.5 billion — but CFO Kevan Parekh guided December-quarter gross margin to 45%–46%, below the 46.3% analyst average per LSEG. At the midpoint that would be Apple’s lowest gross margin since fiscal Q4 2023.
“What we’re seeing with memory pricing right now is unprecedented,” Ternus said, adding costs will keep rising beyond December. Parekh blamed higher memory prices plus some Siri AI ramp costs. September gross margin was 47.9%, helped by about 1 point of tariff refunds.
Apple raised iPhone prices $100 in September “reluctantly,” Ternus said, after earlier Mac and iPad hikes. COO Sabih Khan said manufacturing purchase commitments jumped $33 billion from June to September to lock supply, and Apple still expects holiday iPhone and Mac constraints driven by memory. AI servers are vacuuming up RAM; phone and PC makers are left fighting for scraps.
Featured image: AI-generated editorial illustration by Bugle Blast.
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