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Apple shares fell around 4% in premarket trading on Tuesday after the company warned that rising memory costs could put pressure on its profit margins.
The warning raised investor concerns about supply-chain uncertainty and growing expenses linked to artificial intelligence (AI).
Apple CEO John Ternus discussed the cost pressures during his first earnings report as chief executive on Monday. He described the memory-pricing environment as “unprecedented” and said costs were expected to rise beyond the quarter ending in December.
Apple has benefited from memory chips purchased at lower prices. However, that advantage is expected to fade as the company replaces older inventory with more expensive supplies.
Apple reported a gross margin of 47.9% for the September quarter. The figure was lower than the June-quarter level, even after accounting for the impact of tariff refunds.
The company expects its gross margin to fall to between 45% and 46% in the December-ending quarter. The forecast also reflects costs associated with developing and expanding its AI-powered Siri services.
Dan Coatsworth, head of markets at AJ Bell, said higher production costs could eventually affect consumers.
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“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,” he said.
Despite the pressure on margins, Apple reported record iPhone revenue for the September quarter.
The company achieved the result despite price increases and a staggered product launch schedule. According to the supplied report, only the premium iPhone 18 Pro models launched during the final days of Apple’s fiscal 2026.
iPhone sales reached $57.58 billion, exceeding analysts’ expectations of $56.54 billion, according to data compiled by LSEG.
William Kerwin, senior equity analyst at Morningstar, highlighted the iPhone’s importance to Apple’s wider business.
“We see the flagship iPhone as the linchpin of this ecosystem, from which Apple derives pricing power, switching costs, and a network effect,” he said.
Apple’s share-price decline could significantly reduce its market value if losses continue.
The company had a reported market valuation of $4.94 trillion before the decline. Its shares also traded at nearly 35 times expected earnings over the next 12 months.
By comparison, Alphabet traded at 18.23 times expected earnings, while Microsoft stood at 23.43 times.
Investors will continue to monitor Apple’s memory costs, AI spending and iPhone sales as the company navigates pressure on its profit margins.
[…] Apple Shares Slide 4% as Rising Memory Costs Raise Margin Concerns […]