Apple reported record September-quarter revenue of $114.48 billion, up 12% year over year, and diluted earnings per share of $2.10, beating Wall Street forecasts of $113.39 billion and $1.99 per share. Net income reached $30.71 billion, while gross margin came in at 47.9%, also above expectations.
Despite those results, shares fell 2.8% in after-hours trading to $328.85 after closing the regular session down 1.83% at $338.32. The drop followed management's guidance that December-quarter gross margin would decline to 45% to 46%, compared with 47.9% in September.
Apple said it expects revenue to grow 7% to 10% in the holiday quarter, potentially another record, but rising memory-chip costs tied to the artificial intelligence boom are squeezing profitability. CEO John Ternus called current memory-price increases unprecedented and said he expects them to worsen during December and beyond. Part of September's margin benefit came from a roughly one-percentage-point tariff refund.
TECHnalysis Research analyst Bob O'Donnell said the key question is how well Apple can weather significant component price increases, also noting production and display issues affecting the new foldable iPhone Duo. Citi analyst Atif Malik had previously warned of incremental pressure on gross margin and projected a 140-basis-point hit in calendar 2026.
Segment results showed iPhone revenue up 17% to $57.58 billion, Mac revenue at $10.79 billion, and services at a record $31.57 billion. However, Apple expects services growth to slow to 8% to 9% in December, below Wall Street estimates of about 10.7%. Greater China sales rose 21% but missed forecasts.
