✎ Contributed by Ty Griffin
Apple issued a weaker-than-expected gross margin forecast as rising memory prices and costs associated with expanding Siri AI offset stronger revenue and iPhone performance. The company expects a December-quarter gross margin of 45% to 46%, below the 46.3% Wall Street estimate and potentially its lowest level since late 2023.
CEO John Ternus said memory pricing has reached unprecedented levels and is expected to continue increasing beyond the holiday quarter. Apple anticipates supply constraints affecting iPhones and Macs and has increased its purchase commitments by $33 billion since the June quarter to secure components amid intense demand from AI data centers.
Market Reaction
- Apple Inc. (NASDAQ: AAPL): $332.12, down $6.20 (1.83%)
- Micron Technology Inc. (NASDAQ: MU): $857.00, up $23.41 (2.81%)
- SK Hynix Inc. (NASDAQ: SKHY): $151.16, up $3.45 (2.34%)
- NVIDIA Corp. (NASDAQ: NVDA): $207.82, up $5.76 (2.85%)
- Intel Corp. (NASDAQ: INTC): $61.88, up $1.90 (3.18%)
Investor Sentiment
Apple’s decline reflects concern that higher component costs will pressure profitability even as demand for its products remains healthy. Additional price increases could protect margins but risk weakening consumer demand, while absorbing more of the costs could produce further margin declines.
The gains in Micron and SK Hynix highlight the favorable pricing environment for memory manufacturers as AI infrastructure absorbs available supply. Investors will monitor whether producers can expand capacity without disrupting pricing, as well as whether constraints limit shipments for Apple, Intel and other device makers during the holiday season.
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