Even stingy Apple endures AI collateral damage
AAPL•Apple's quarterly revenue rose 12% year over year, while gross margin fell to 48% from 50%. CEO John Ternus expects profitability to decline another 2 to 3 percentage points before year-end, largely because of memory costs.
1. Revenue and cash generation
Apple's latest quarterly results showed revenue up 12% year over year, with Services growing 10% and accounting for more than a quarter of sales. The company generated $145 billion in operating cash over the past four quarters and spent $9 billion on capital expenditures. It returned $28 billion to shareholders last quarter.
2. Memory costs pressure margins
Rising memory-chip demand from AI is pushing up costs for computer and phone makers. Apple’s gross margin fell to 48% from 50% in the prior quarter, despite a benefit from tariff refunds, and Ternus expects profitability to decline another 2 to 3 percentage points before year-end, largely because of memory costs. Apple raised iPhone prices in September, while PC shipments from Apple, Lenovo, Dell and others fell 21% to 57 million in the third quarter, Counterpoint Research estimates.
