Apple posts earnings beat but investors wary of rising chip costs and margin outlook
Apple reported revenue of $114.5 billion and earnings of $2.10 per share for the September quarter, surpassing forecasts, while noting higher memory-chip expenses and a slower services growth forecast.
Apple Inc. announced revenue of $114.5 billion for the quarter ending 26 September 2026, a 12 percent increase from a year earlier, and earnings of $2.10 per share, exceeding analysts’ expectations of $1.99 per share, according to FactSet. The results were driven by a rise in iPhone sales, which grew 17.5 percent to $57.6 billion, and a near-24 percent jump in Mac revenue. However, iPad sales fell 10.4 percent and wearables, home and accessories declined 7.9 percent.
Shares slipped about 3 percent in after-hours trading as investors focused on margin pressure. The company said tariff refunds added $0.05 per share to earnings and lifted gross margin to 47.9 percent, but warned that the benefit would not continue. Apple also highlighted higher memory-chip costs and spending on its Siri AI rollout, which it expects will reduce gross margin to 45-46 percent in the December quarter, below the 46.3 percent forecast.
"Where investors were left wanting was in the margin," said Ben Barringer, head of technology research at Quilter Cheviot.
CEO John Ternus, who took over on 1 September, noted a 21 percent revenue rise in Greater China during the quarter and said iPhone and Mac sales were the main growth drivers. The company projected revenue growth of 7-10 percent for the December quarter, above the 6.1 percent analysts had expected, but forecast services revenue growth to slow to 8-9 percent from 9.8 percent.
Apple said it is mitigating higher component costs by using existing inventory purchased at lower prices and by limiting spending on other parts. Capital spending fell 29 percent to $9 billion for the full fiscal year, while research and development rose 32 percent to $45.8 billion. The firm did not disclose the portion allocated to AI.
Analysts noted that Apple’s more modest AI investment compared with peers such as Microsoft, Alphabet, Amazon and Meta may shield it from near-term cash-flow pressures, but could pose long-term competitive risks.