December-quarter gross margin is guided to 45 to 46%, down from 47.9% in the quarter just reported
Apple shares fell 4 percent during the company’s fiscal fourth-quarter earnings call on Monday, before paring the decline to 2 percent, after executives guided December-quarter gross margin to 45 to 46 percent, down from 47.9 percent.
Reuters reported the move, noting the stock had been little changed in after-hours trading before the call.
CNBC put the slide at 3 percent in extended trading.
The stock entered the print at 36 times earnings expected over the next 12 months, almost twice the multiple of the S&P 500, according to data compiled by Bloomberg.
Bloomberg reported the stock had climbed 25 percent from a late-June low, adding roughly US$1tn in market value, and overtook Nvidia on Friday as the world’s most valuable company at US$5.03tn.
Revenue for the three months ended September 26 reached US$114.5bn, up 12 percent, with diluted earnings per share of US$2.10 and gross margin of 47.9 percent, Apple said in its results statement.
Tariff refunds contributed approximately 1 percentage point of margin and US$0.05 of earnings per share.
CNBC reported the figures beat LSEG consensus of US$113.39bn and US$1.99.
Kevan Parekh, Apple’s chief financial officer, told the investor call that memory costs will keep rising into next year, Reuters reported.
Asked whether Apple had signed a long-term supply agreement, chief operating officer Sabih Khan did not directly confirm a deal, the outlet reported, but said purchasing commitments rose by US$33bn during the quarter. Services revenue growth was guided at 8 to 9 percent against analyst expectations of 10.7 percent.
Apple raised iPhone 17 prices by US$100 alongside the iPhone 18 Pro launch and increased some MacBook prices.
Memory costs ran higher than in the June quarter, John Ternus told Reuters, partly offset by inventory on hand and lower costs on some non-memory components.
The price increases “provided some offset,” he said.
Ternus told Reuters a very small percentage of iPhone Duo units had been returned for display issues and that Apple is replacing them.
Supply is “constrained as of today,” he said, and Apple cannot predict when supply and demand will balance.
Bloomberg, citing Bloomberg Intelligence estimates, reported the device starts at US$1,999 and could generate US$28bn to US$32bn in fiscal 2027 sales.
Fewer than 60 percent of analysts tracked by Bloomberg recommend buying, and at least six downgraded the stock after the late July report.
Loop Capital cut to hold in October 2026 citing iPhone shipment trends, and Bank of America removed Apple from its US 1 list on Friday.
“Apple is in the 99 percent percentile of its historical valuation, and when something is priced so fully, there’s risk if something unexpected comes along,” said Ben Carew, co-chief investment officer at Tandem Investment Advisors, in comments to Bloomberg.
Free cash flow for fiscal 2026 is expected to expand more than 40 percent to US$141.5bn, Bloomberg reported, while Alphabet, Meta, and Amazon carry free cash flow deficits expected to continue.
Daniel Flax, a senior research analyst at Neuberger Berman, told the publication that Apple’s ability to execute on the product cycle and translate that into free cash flow growth is what will matter most for the stock.
