Apple shares fell 1.6% Tuesday despite reporting better-than-expected income as merchants zeroed in on rising prices – fearful that an AI-driven surge in chip costs could hit growth.
The iPhone maker recorded $114.8 billion in income – beating Wall Street estimates of $113.9 billion and up 12% from $102.5 billion in the same period last 12 months. Revenue for the iPhone, in explicit, hit $57.58 billion, also above expectations of $56.54 billion.
But gross sales in its iPad, wearables and companies divisions missed estimates. Revenue on iPads of $6.23 billion missed estimates of $6.99 billion; wearables income of $8.3 billion also came in below $8.95 billion; and companies income of $31.57 billion fell short of $31.59 billion.
Apple CEO John Ternus (above) took the helm from longtime chief Tim Cook in September. REUTERS
The tech giant also forecast a gross margin of 45% to 46% in the essential vacation quarter, falling short of estimates of 46.3% to 47% – and spooking traders who took it as a signal that Apple is bracing for a growth slowdown.
Ben Barringer, head of technology analysis at Quilter Cheviot, wrote in a notice that while Apple’s gross margins reached 47.9% in the fourth quarter, it was partially due to tariff advantages, which will ultimately stop, while reminiscence chip prices will proceed to pose a problem.
“Where investors were left wanting was in the margin,” Ben Barringer, head of technology analysis at Quilter Cheviot, wrote in a notice. “Once those tariff benefits roll off, the margin will get hit and as such the guidance is for that to decline.”
In June, Apple hiked costs across a slew of its merchandise – including MacBooks, iPads and home gadgets – by as much as $500, blaming a surge in demand for reminiscence chips as tech giants rush to construct out their AI capabilities. The company also raised costs on its iPhones by $100.
Its fourth-quarter earnings report contains just eight days of new iPhone 18 Pro gross sales, one of its newest releases. Investors will have to wait for gross sales figures of the new iPhone Duo, which has a jaw-dropping price tag of practically $2,000 and got off to a shaky begin, with cracked and glitching screens.
Investors will have to wait for gross sales figures of the new iPhone Duo. Anadolu via Getty Images
Despite issues around growth, John Ternus – who took over from longtime CEO Tim Cook in September – praised the outcomes and called it Apple’s “best fiscal year ever.”
However, he also famous that reminiscence prices were even increased this quarter than they were in the June period, another warning signal of doable margin troubles to come.
Shares of Apple fell in early morning trading Tuesday. X
The Nasdaq rose 0.8% Thursday even after the disappointing Apple outcomes. Traders tried to bounce back from a sell-off over the previous few weeks after several tech giants reported steep AI spending, sending the main stock index close to correction territory.
Apple shares are up 22.9% so far this 12 months, trading at a premium in contrast to other massive tech shares like Amazon and Microsoft – which means there’s little room for error and traders are faster to react from warning indicators in the iPhone maker’s earnings.
