Standfirst: Apple reported stronger-than-expected revenue and profit for the final quarter of its 2026 financial year, helped by iPhone demand. Investors nevertheless focused on rising memory costs, slower services growth and the company’s spending on artificial intelligence.
Apple delivered a better-than-expected quarterly performance, but the results did not fully reassure investors. Shares fell by about 3% in after-hours trading as markets weighed record iPhone sales against narrower expected margins and a slower outlook for services.
The figures cover the three months to 26 September 2026 and represent Apple’s first earnings report since John Ternus became chief executive on 1 September, succeeding Tim Cook.
Apple revenue and profit exceed forecasts
Apple said revenue increased 12% year on year to $114.5 billion (€102.1 billion). Net income also rose 12%, reaching $30.71 billion (€27.4 billion), or $2.10 per share, compared with $27.47 billion (€24.5 billion), or $1.85 per share, a year earlier.
Analysts surveyed by FactSet had expected earnings of $1.99 per share on revenue of $113.4 billion (€101.1 billion). Apple therefore exceeded expectations on both measures.
The company’s gross margin reached 47.9%, helped partly by tariff refunds that added approximately $0.05 per share to earnings and lifted the margin by about one percentage point.
iPhone leads product performance
iPhone revenue rose 17.5% to $57.6 billion (€51.4 billion), supported by strong September-quarter sales. The quarter included only the first days of sales for the premium iPhone 18 Pro models.
Other product categories produced a more mixed picture:
- Mac revenue increased almost 24%.
- iPad revenue declined 10.4%.
- Wearables, home and accessories revenue fell 7.9%.
- Services revenue reached a record $31.6 billion (€28.2 billion).
Apple’s new foldable iPhone Duo began selling during the following quarter, meaning its sales were not included in these results.
Rising memory costs threaten Apple’s margins
The main concern for investors was not the September-quarter result but Apple’s forecast for the period ahead. The company expects gross margin to fall to between 45% and 46% in the December quarter, below the 46.3% analysts had forecast.
Apple attributed most of the pressure to higher memory chip costs, alongside spending connected with the rollout of Siri’s artificial-intelligence capabilities. The company has already increased prices on several products and is using inventory purchased at lower prices to soften the effect of more expensive components.
Higher input costs are becoming an important issue for technology manufacturers because memory is used across smartphones, computers and other connected devices. Lower margins could limit how much of those costs Apple can absorb without further price increases or changes to its product strategy.
Sales outlook remains stronger than expected
Despite the margin warning, Apple expects December-quarter revenue to rise by between 7% and 10% from a year earlier. That forecast is above the 6.1% growth analysts had anticipated and would make the quarter Apple’s largest by revenue.
Services growth, however, is expected to slow to between 8% and 9%, compared with 9.8% in the September quarter. Apple pointed to pressure from third-party licensing arrangements and currency movements.
China recovery offers support, but not all targets were met
Apple reported a recovery in Greater China, where quarterly revenue increased 21%. Revenue for the full financial year rose 28% in the region, with iPhone and Mac sales identified as key contributors.
That improvement was positive for the company after concerns about demand in one of its most important markets. However, analysts cited in market reporting said China revenue, wearables and home-device sales were still below expectations.
The contrasting signals show why investors remain cautious. Stronger headline revenue does not necessarily mean every product line or region is performing equally well.
Apple’s AI strategy remains under scrutiny
Apple is also facing continued pressure to demonstrate progress in artificial intelligence. Rather than matching the vast infrastructure spending planned by some technology rivals, the company is relying heavily on partnerships while keeping its own capital expenditure comparatively restrained.
Apple confirmed in September that the models behind its new Siri were developed with Google under a multi-year arrangement announced in January. The partnership could allow Apple to improve its AI services without committing to the same level of infrastructure spending as companies building large data-centre networks themselves.
Apple’s capital expenditure fell 29% to $9 billion (€8 billion) during the full financial year, while research and development spending increased 32% to $45.8 billion (€40.8 billion). The company does not separately disclose how much of those totals is directed towards AI.
That cautious approach may help protect cash flow, but it also leaves Apple under pressure to show that partnerships can deliver competitive AI products. The rollout of Siri will therefore remain a key focus for investors alongside hardware sales and component costs.
What the results mean for Apple’s next quarter
Apple enters the December quarter with several positive factors: strong iPhone momentum, higher expected revenue and signs of improvement in China. At the same time, the company must manage rising memory prices, a slower services trajectory and the cost of expanding its AI offering.
The new foldable iPhone Duo will also contribute to the current quarter’s performance, although the source results do not provide sales figures for the device. Investors will likely look for evidence that new products can support growth without further eroding margins.
Conclusion
Apple’s earnings beat expectations on revenue and profit, but rising chip costs have shifted attention to profitability rather than sales alone. The company’s next test will be whether strong iPhone demand and new product launches can offset narrower margins, slower services growth and the investment required to make its AI strategy credible.