Apple Stock Slides as Record September Quarter Meets Memory Squeeze

What happened

Apple reported record September-quarter revenue of $114.5 billion, up 12% and above analysts' estimates, with profit per share of $2.10. It guided December-quarter gross margin, which means profit left after product costs, to 45% to 46%.

Confirmed

Global impact / market context

Higher memory costs eat into Apple's profit per sale even as revenue grows. The lower margin guidance, plus services growth slowing to 8% to 9%, means investors expect less profit from each dollar of future sales, which explains the weak stock reaction in the article.

Analyst inference

The report separates demand from costs: iPhone, Mac and Greater China sales rose, but iPad and wearables shrank, and tariff refunds lifted gross margin, which means profit left after product costs. That mix pushes investors to focus on memory costs rather than revenue records.

Analyst inference

What to watch

1. Apple guided December-quarter gross margin to 45% to 46%, below the 46.3% average estimate, so watch the actual figure for whether memory costs squeeze profit per sale further. Confirmed
2. Watch whether Apple raises prices or changes product configurations to offset higher memory costs, since management only said cheaper non-memory components and carried inventory partly offset the hit. Proposed
3. Watch services growth, guided to 8% to 9%, because a slowdown there would reduce high-profit recurring revenue and make total company profit more sensitive to hardware costs. Analyst inference

Evidence

• gurufocus.com