Apple Just Had Its Biggest September Quarter Ever, but Memory Costs Are Biting

Keypoints:

• Revenue hit $114.5 billion, up 12 percent
• IPhone brought in $57.6 billion and Mac jumped 24 percent
• Services set a new record at $31.6 billion
• Holiday quarter margin is guided to 45 to 46 percent because of pricey memory chips
• IPhone Duo is still supply constrained with no end date in sight

Apple wrapped up its fiscal year with a record September quarter, and it was the first earnings call for new CEO John Ternus, who took over from Tim Cook on September 1. Revenue came in at $114.5 billion, up 12 percent from a year ago, and profit landed at $30.7 billion, or $2.10 a share. Both beat what Wall Street was expecting.

The iPhone did most of the heavy lifting. It brought in $57.6 billion, up 17 percent, helped by the new iPhone 18 Pro lineup and the iPhone Duo. Mac was the surprise star with $10.8 billion in sales, up 24 percent, led by the MacBook Neo. Services hit an all time high of $31.6 billion. Greater China grew 21 percent, a September quarter record. For the full year Apple sold $478.8 billion worth of products and services, its best ever.

Now the catch. Apple says memory prices are at unprecedented levels, and that's squeezing margins. Strip out a one time benefit from tariff refunds and gross margin slipped about a point from the last quarter. For the holiday quarter, Apple expects a gross margin between 45 and 46 percent, which also includes some early costs from rolling out its new Siri AI. The company already raised prices on Mac and iPad over the summer and on iPhone in September, and it said it's too early to judge how buyers are reacting.

Supply is the other story. The iPhone Duo is still constrained, and Ternus said it's hard to predict when supply and demand will balance out. Apple expects December quarter revenue to grow 7 to 10 percent, which it called the best quarter for revenue in company history. To lock in more chips, its manufacturing purchase commitments jumped by $33 billion between June and September.

So the picture is pretty simple. Demand is strong and products are selling out. The thing holding Apple back is the price and availability of memory chips, and it's worth watching how long price hikes can offset that before shoppers push back.