Apple Posts Record $114.5 Billion Quarter, Stock Falls Anyway

Apple booked $114.5 billion in fourth-quarter revenue, up 12% year over year and roughly $1 billion above Wall Street's consensus — and its stock still fell about 2% to $327.25 in early trading.

The company beat every headline metric that analysts tracked. Wall Street expected $113.46 billion in revenue and earnings per share of $2.00; Apple delivered $114.5 billion and $2.10. The quarter closed out Apple's fiscal 2026 financial year.

"Today, Apple is proud to report a September quarter revenue record of $114.5 billion, up 12 percent from a year ago," Apple CEO John Ternus said, "with iPhone reaching a September quarter record and Services reaching an all-time high, capping off our best fiscal year ever."

What did the hardware numbers show?

iPhone revenue came in at $57.58 billion, beating analyst expectations by more than a billion dollars. That figure matters because Apple raised prices on its smartphones in recent months — and demand apparently held up anyway.

Mac revenue told a similar story. It reached $10.79 billion, also more than a billion dollars above what analysts had modeled.

In plain words: customers kept buying even as prices climbed.

Why did the stock drop after a beat?

Investors price the future, not the past. Alongside its results, Apple issued guidance for the first quarter of fiscal 2027 — its most important quarter, because it captures the first full sales period of the new iPhone plus the holiday season.

On the top line, the outlook was strong. Apple forecast record Q1 revenue of $158.18 billion. But revenue is not profit, and the margin picture is where the story turned.

Apple guided gross margins for the quarter to a range of 45% to 46%. As CNBC noted, analysts expected guidance of 46.3%. Either way, the forecast sits well below the 47.9% gross margin Apple reported in Q4.

The lower-than-expected margin guidance appears to be the main driver of the stock decline. In plain words: Apple said it will sell a record amount of goods but keep less of each dollar.

What is squeezing Apple's margins?

The culprit is what the industry has nicknamed "RAMageddon" — the skyrocketing cost of memory chips. AI hyperscalers are buying up vast quantities of memory to power their data centers, leaving consumer electronics makers like Apple to pay more for a component that used to be relatively inexpensive.

Apple chief financial officer Kevan Parekh told analysts that the expected margin decline "includes primarily the impact of higher memory costs" along with "some costs related to the ramp of Siri AI," the company's revamped AI chatbot.

Is Apple passing costs to customers?

Only partly. Apple has raised prices on most of its products in recent months, yet margins are still expected to fall. That gap shows the company is absorbing a portion of the memory cost increase rather than passing it through in full.

The strategy has a clear logic: pushing prices higher still could deter customers from upgrading at all. The cost of restraint shows up on the margin line instead.

In plain words: Apple is trading some profit per device to protect the pace of upgrades.

What happens next?

The Q1 margin guidance of 45% to 46% will be the number to watch when Apple reports again. If memory prices keep climbing, the gap between record revenue and shrinking margins could widen — and the market has already signaled which of the two it cares about more.