Apple shares slide as higher memory costs fuel margin concerns

Apple forecasts December-quarter gross margins of 45%-46%, including costs of upgrading its AI-powered Siri

Apple shares fell about 4% in premarket trading on Tuesday after the tech giant warned that rising memory costs would squeeze gross margins, stoking investor concerns ​over persistent supply-chain uncertainties and mounting AI expenses.

John Ternus delivered his first ‌earnings report as Apple CEO on Monday, describing the memory-pricing environment as "unprecedented" while expecting costs to rise beyond the quarter ending in December.

The iPhone maker has benefited from using memory purchased ​at lower prices, but that advantage is expected to diminish over ​time, leaving more of its purchases exposed to higher prices.

Gross margins, ⁠which measure the percentage of revenue retained after the costs of making its products, was ​47.9% for the September quarter, down from June-quarter levels even when factoring in ​the impact of tariff refunds.

Apple expects gross margin for the December-ending quarter to range between 45% and 46%, which also reflects the expenses tied to the ramp-up of its AI-powered ​Siri.

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The CEO comments imply "Apple products are going to become even more expensive, which is ​not ideal at a time when the consumer is feeling the pinch from a higher ‌cost ⁠of living," said Dan Coatsworth, head of markets at AJ Bell.

However, Apple reported a record September quarter for iPhone revenue despite price increases and a staggered iPhone release schedule where only the premium 18 Pro models were launched in the last days of the ​company's fiscal 2026.

Fourth-quarter ​iPhone sales, which ⁠included iPhone 18 Pro models but not Duo, were $57.58 billion, above estimates of $56.54 billion, according to data compiled by LSEG.

"We ​see the flagship iPhone as the linchpin of this ​ecosystem, from ⁠which Apple derives pricing power, switching costs, and a network effect," said William Kerwin, senior equity analyst at Morningstar.

Apple is set to lose over $170 billion in market value ⁠from ​its $4.94 trillion valuation if losses hold.

The stock trades at ​nearly 35 times expected earnings over the next 12 months, compared with 18.23 times for Alphabet and ​23.43 times for Microsoft.