Apple Retreats 4% Despite Earnings Beat as Memory Costs Squeeze Margin Outlook; Microsoft Dips, Meta Holds Steady

A record September quarter from Apple (NASDAQ:AAPL | AAPL Price Prediction) is being undercut by a weaker margin outlook for the holidays, pulling the iPhone maker lower while the rest of mega-cap tech stays calm. In morning trading ahead of the opening bell, Apple stock is at $325, down 4%. That compares with the prior session’s close of $338.32.

By comparison, Microsoft (NASDAQ:MSFT) is falling while Meta Platforms (NASDAQ:META) is holding steady. Meanwhile, Alphabet (NASDAQ:GOOGL) is barely moving. The gap comes down to memory chips: Apple builds them into every device it sells, and the AI build-out is driving their cost sharply higher.

Apple’s Earnings Beat Got a Lift From Tariff Refunds

Apple reported after the close on November 2 that its Q4 FY2026 EPS reached $2.10, exceeding Bloomberg’s consensus estimate of $2. Against a revenue estimate of $113.46 billion, Apple brought in $114.48 billion. Sales of the iPhone led the way, with Apple reporting $57.58 billion versus the $56.48 billion estimate.

The quarter marked Apple’s first earnings call under CEO John Ternus, who took over from Tim Cook. Tariff refunds, a one-time item, added $0.05 to Apple’s EPS and a percentage point to its 47.9% gross margin. Without those refunds, the company’s gross margin would have slipped from the June quarter, primarily because of higher memory costs.

Memory Costs Drag Apple’s Margin Guide Below Estimates

Apple CFO Kevan Parekh guided the company’s December-quarter gross margin to a range of 45% to 46%, below the 46.3% analyst estimate. Parekh pinned the decline mostly on higher memory costs, with Siri AI cloud expenses and hardware revenue deferrals adding to the pressure at Apple. Ternus called memory pricing “unprecedented” and said Apple expects its memory purchase pricing to keep rising beyond the December quarter.

To improve supply, Apple’s purchase obligations rose by $33 billion from the June quarter to the September quarter, chief operating officer Sabih Khan said. Management also expects memory to limit Apple’s Mac and iPad supply in the December quarter, even with demand running higher than expected.

Greater China was another soft spot, with Apple reporting $17.54 billion against an estimate of $18.75 billion. Apple’s Services revenue of $31.57 billion was in line with the $31.58 billion estimate. For the December quarter, Parekh projected Apple’s Services growth to 8% to 9%, short of the 10.7% analyst expectation. On the positive side, Parekh forecast Apple’s total revenue growth to 7% to 10% and noted the period should be the best revenue quarter in the company’s history.

What the Peer Group Says About Apple

Compared with Apple, Microsoft stock is at $503.80, down 0.7%. Meta Platforms stock is at $608.25, up 0.3%. Shares of Alphabet are at $279.70, matching that gain. That leaves Apple with the largest decline in the group.

Over the past week, Apple stock is down 6%. During the same stretch, Microsoft stock is down 5%. Alphabet’s decline was largest still at 12%, which cuts against a purely Apple-specific story and shows the group was already under pressure before the earnings report.

All three of Apple’s peers rank among the biggest buyers of AI infrastructure, investing money into data centers that power cloud, advertising and AI services. Apple sits on the other side of that build-out as a consumer hardware seller, so rising memory prices land directly on the cost of each iPhone, Mac and iPad. Even Apple’s Services business carries a new cost, since server-side Siri AI processing creates inference expenses there. The suppliers on the receiving end of that spending, the power, cooling and networking names, are the ones we rounded up in a free report on seven AI infrastructure stocks that aren’t chipmakers.

Apple’s Holiday Quarter Becomes a Memory Test

U.S. stock futures point to a lower open, weighed down by Apple’s margin outlook and the latest results from Palantir Technologies (NASDAQ:PLTR), per the morning market setup. Midterm elections add another background as voters head to the polls.

Apple faces the question of whether price increases, carry-in inventory and cheaper non-memory parts can keep offsetting memory inflation as that inventory benefit fades. Bulls can point to a record revenue outlook, iPhone Duo demand that’s still outpacing supply, and an installed base above 2.5 billion active devices. Bears have a case in management’s expectation that memory pricing keeps climbing, plus memory-driven limits on Mac and iPad supply.

Apple’s next earnings report will show whether its gross margin lands inside the guided range. It may make sense to stay cautious while Apple’s memory-cost squeeze plays out.

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