John Ternus’ first quarter as Apple chief executive began with the kind of headline any new leader would want. Apple reported fiscal fourth-quarter revenue of $114.5 billion, ahead of the $113.46 billion analysts expected, while earnings per share reached $2.10 against a $2 consensus.¹

On the earnings call, Ternus cast the period as the product of an unusually busy launch cycle. “This is an amazing time at Apple,” he said, describing it as “one of the most prolific launch periods in our history.” iPhone revenue came in at $57.58 billion, beating forecasts, while Mac sales of $10.79 billion also outperformed.²

But the upbeat opening gave way to the issue now defining Apple’s holiday quarter: memory. CFO Kevan Parekh said gross margin would fall to 45% to 46%, below the 46.3% analyst average, primarily because of higher memory costs and expenses tied to ramping Siri AI.³

That outlook sharpened investors’ focus on what Ternus called “unprecedented” memory pricing. Apple said it expects supply constraints for iPhones and Macs during the holiday period, as AI-server companies and hyperscalers compete aggressively for RAM. The company has increased purchase obligations by $33 billion from the June quarter in an effort to secure components, according to its operations chief.³

The pressure is not confined to costs. Greater China revenue was $17.54 billion, about $1.2 billion below expectations, while iPad sales also missed estimates. One analyst called the China shortfall “a worrying pattern,” arguing that weakness in wearables, home products and accessories showed the challenge extended beyond a single market.²

Apple shares fell 3% the next morning. Ternus’ early test is now clear: preserve the iPhone-driven momentum while deciding how much of an industry-wide memory shock Apple can absorb—and how much customers will have to pay.