John Ternus opened his first earnings report as Apple’s chief executive with the kind of numbers a new CEO wants: fiscal fourth-quarter revenue reached $114.5 billion, ahead of the $113.46 billion Wall Street expected, while earnings per share of $2.10 also beat forecasts. iPhone revenue came in at $57.58 billion, above estimates, and Mac sales beat expectations by more than $1 billion.¹

Ternus, who succeeded Tim Cook on September 1, cast the quarter as the product of an unusually busy launch cycle. “This is an amazing time at Apple,” he told analysts, calling the period “one of the most prolific launch periods in our history.”¹ Yet the upbeat opening was quickly overtaken by a warning about the costs of keeping those devices on shelves.

CFO Kevan Parekh said Apple expects gross margin of 45% to 46% in the December quarter, below the 46.3% analyst consensus. The forecast reflects “primarily the impact of higher memory costs,” plus expenses tied to the Siri AI ramp.² Apple shares slid 3% in Tuesday morning trading as investors absorbed the prospect of a third straight quarterly margin decline.²

The company’s position is that the squeeze is industry-wide, driven by AI server operators and hyperscalers competing aggressively for memory. Ternus called current pricing “unprecedented” and said costs should keep rising beyond December.² Apple has raised hardware prices and increased purchase obligations to secure components, but it still expects memory-led constraints on iPhones, Macs and iPads during the holiday quarter.²

That pressure is especially visible in the new $1,999 iPhone Duo. Chief operating officer Sabih Khan said the foldable is constrained and that it is “really hard to predict when supply and demand will be in balance.”³ For Apple, then, robust demand is both the good news—and the problem it must now pay more to solve.³