The short version
Apple (AAPL) reported on Monday, and almost everything was a record.
- 💵 Revenue: $114.5 billion, up 12%, a September quarter record.
- 📊 Earnings: $2.10 a share, up 14%, including $0.05 from tariff refunds.
- 📱 iPhone: $57.58 billion, up 17%, a September quarter record.
- 🎯 Full fiscal year revenue: $479 billion, an all-time record and the company's best year ever.
It beat expectations on both lines, against about $113.4 billion of revenue and $1.99 a share.
The shares fell about 3% after hours.
The reason is one number in the outlook. Apple guided December quarter gross margin to 45-46%, below what analysts expected, and the cause is rising memory prices.
That connects to something we wrote about last week. Hard drive and memory prices have been climbing because AI data centres bought everything available. Apple buys the same components. The AI build-out is now showing up in the cost of making an iPhone.
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What Apple reported
- 💵 Revenue: $114.48 billion, up 12% year on year.
- 💰 Net income: $30.71 billion.
- 📊 Diluted earnings: $2.10 a share, up 14%, including $0.05 from tariff refunds.
- 📱 iPhone: $57.58 billion, up 17% from $49.03 billion.
- 💻 Mac: $10.79 billion, up 24%, the fastest growing product line.
- 📲 iPad: $6.23 billion.
- 🛠️ Services: $31.6 billion, up 10%, an all-time high.
- 📦 Products overall: $82.9 billion, up 12%.
- 🇨🇳 Greater China: $17.54 billion, up 21%, a September quarter record.
And the full year: revenue of $479 billion, an all-time record, with double-digit earnings growth. Apple described it as its best fiscal year ever.
Two details worth noticing
It could not make enough. Management described supply constraints on iPhone, Mac and iPad. The 17% iPhone growth happened despite the company being unable to meet demand fully, which is an unusual qualifier on a record.
Currency worked against it. The company reported sequential foreign exchange headwinds of nearly two percentage points. Both the growth figures and the records were achieved with that drag included.
Taken together, the underlying quarter was arguably stronger than the headline, which makes the share reaction more interesting rather than less.
The number that moved the shares
December quarter gross margin is guided to 45-46%, below what analysts expected.
Gross margin is the share of revenue left after the direct cost of making the product. For Apple it is one of the most closely watched figures in technology, because it is both high and historically stable.
The stated cause is memory prices. The chips that store data in phones and computers have become significantly more expensive, and Apple buys enormous quantities of them.
That is the whole story of this quarter's share price. Records in the rear-view mirror, a cost problem in the windscreen.
Follow the chain
This is the clearest example yet of how one technology boom reaches a company that is not part of it.
- 🏗️ AI data centres need vast quantities of memory and storage, and they have been buying everything available.
- 📈 Prices rose accordingly. We wrote in October about hard drive prices climbing around 50% because data centres had cleared the market.
- 📱 Apple buys the same components, in enormous volume, for phones and computers.
- 📉 Apple's December margin guidance came in light, and memory costs are the stated reason.
Apple is not an AI infrastructure company. It is not building data centres at the scale of Amazon or Alphabet. It is paying part of the bill anyway, through its component costs.
That is the lesson worth keeping. A technology shift does not only create winners and losers inside its own industry. It moves prices for everyone buying the same inputs, and those effects arrive quietly, in a margin forecast rather than a headline.
We have now followed this pattern through several industries this month, from oil refining lifting Shell while hurting Ryanair to cocoa prices reversing at Cadbury's owner. Same mechanism, different input.
A new chief executive, reporting for the first time
These were the first results delivered under John Ternus, who has succeeded Tim Cook as chief executive. Cook presented the June quarter.
Ternus's framing was that the September quarter capped Apple's best fiscal year ever, and that the company is closing the year with its most ambitious product lineup yet.
Why a transition matters commercially, regardless of who holds the job: a new chief executive inherits expectations set by a predecessor, and the first few quarters tend to be read as evidence about direction rather than simply as results. That makes the December quarter, and the margin number inside it, more scrutinised than it would otherwise be.
What could go wrong
- 💾 Memory costs are outside Apple's control. The December margin guidance reflects them, and nobody can say how long the shortage lasts. If AI infrastructure spending continues, so does the pressure.
- 📦 Supply constraints persisted across three product lines. Apple could not fully meet demand for iPhone, Mac or iPad, which caps how much a record quarter can tell you.
- 💱 Currency is a live drag, at nearly two percentage points sequentially, and it moves independently of anything the company does.
- 🧾 Earnings included $0.05 from tariff refunds, which is a one-off benefit rather than trading performance, and it will not repeat in the same form.
- 👔 A leadership transition adds uncertainty, not because of any individual, but because the market has less evidence to judge the next few quarters against.
- 📈 And expectations are set by the record. A best-ever year raises the bar for the one that follows.
AAPL is an example to research, not a recommendation.
What should investors take from this?
Read the guidance, not just the quarter.
Apple reported its best fiscal year in history and the shares fell, because one forward-looking number pointed the other way. The results describe what happened. The guidance describes what management expects next, and that is what gets priced.
Three habits:
- 🔮 Find the forward number in any results release. For Apple it is gross margin guidance. For others it is revenue guidance, orders, or backlog.
- 🔗 Trace the input costs. A company can be hurt by a boom it is not part of, simply by buying the same components, which is exactly what has happened here.
- 🧺 And remember the index effect. Apple is among the largest companies in the S&P 500, where the ten biggest holdings are roughly 38% of the index, so this quarter moved a great many portfolios that never chose it.
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FAQs
What did Apple report for Q4 FY2026? Revenue of $114.5 billion, up 12%, a September quarter record, with diluted earnings of $2.10 a share, up 14% and including $0.05 from tariff refunds. Net income was $30.71 billion. iPhone revenue was $57.58 billion, up 17%, and Services reached an all-time high of $31.6 billion.
Why did Apple shares fall after a record quarter? The company guided December quarter gross margin to 45-46%, below analyst expectations, citing rising memory prices. Markets price the outlook as well as the result.
Why are memory prices rising? Demand from AI data centres has absorbed much of the available supply of memory and storage components, pushing prices up across the industry. Apple buys the same components for its products.
Who is Apple's chief executive? John Ternus, who has succeeded Tim Cook. These were the first results reported under him.
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