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Posted November 3, 2026 at 10:45 am
With memory chip prices soaring, the tech firm’s profit margins looked more lackluster than expected.
Apple released its first set of results under a new CEO late on Monday – and while sales beat expectations, rising memory chip costs bit into profit margins.
The iconic tech firm’s quarterly revenue rose 12% to $114.5 billion, ahead of the $113.4 billion expected. iPhone sales led the way, bringing in $57.6 billion and topping forecasts – even though the quarter included just eight days of iPhone 18 Pro sales. Apple’s services revenue grew 10%, in line with expectations. But sales in China fell short, despite jumping more than 20%.
▶ The overall weak spot was profitability. Apple kept about 48 cents of every dollar it brought in after paying to make its products, down from 50 cents the quarter before. That was still better than analysts expected, but it highlights the growing cost of memory chips…
For markets: Special snowflake – for now.
Smartphone shipments across the industry fell by a record 22% last quarter. With AI data centers gobbling up memory chips, component costs have skyrocketed, forcing many phonemakers to raise prices. But Apple’s shipments dropped just 4%.
▶ At a baseline, the tech giant’s already high prices give it more room to swallow rising component costs. That said, even Apple has started to pass those costs on to customers: this September, it raised iPhone prices by $100. The firm’s customers are notoriously loyal – but if things keep going up, they might not stay that way.
The bigger picture: Think different.
Apple’s shares trade at around 36 times next year’s expected earnings, almost double the S&P 500’s multiple. That premium reflects its stability – and its appeal to investors wary of soaring AI spending.
▶ While rivals have poured hundreds of billions into AI infrastructure, Apple’s spent a fraction of that. If AI revenue disappoints, the firm’s restraint looks wise. But if those bets pay off, investors could start rewarding the spenders instead… and Apple’s valuation could shrink.
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Originally Posted November 2, 2026 – Apple Brought In Shiny Sales, But Higher Costs Ate Into Its Margins
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