Apple Slides After Hours as a 7%-10% Holiday-Quarter Guide and Memory Costs Overshadow a Q4 Beat

Apple (AAPL) shares fell about 3% in after-hours trading on Monday, Nov. 2, after the company guided December-quarter revenue growth of 7% to 10%, below the roughly 11.4% analysts expected, and a gross margin of 45% to 46% that reflects surging memory costs. The guidance overshadowed fiscal fourth-quarter revenue of $114.48 billion, up 12%, and EPS of $2.10, both above estimates. It was CEO John Ternus's first earnings call.

The December-quarter outlook

By our calculation, the revenue guide is 1.4 to 4.4 percentage points below the 11.4% analysts expected, and the midpoint gross margin of 45.5% is about 2.4 points below fiscal Q4. Apple said Q4 gross margin included a benefit of roughly 1 percentage point from tariff refunds, so the underlying decline is closer to 1.4 points by our calculation. The guide includes memory chip expenses and Siri AI costs.

Memory costs

Ternus called surging memory prices unprecedented and warned of further increases through December and beyond, partly offset by June price increases and inventory carried in. Chief Financial Officer Kevan Parekh said memory purchase prices are expected to keep rising and that manufacturing purchase obligations rose by $33 billion between the June and September quarters. Apple also said its limits on advanced-node chip output are loosening as it moves more products to 2-nanometer technology.

Other takeaways from the call

• Margins. Product gross margin reached 37.2%, up about 100 basis points from a year earlier, though the quarter included the tariff-refund benefit. EPS of $2.10 included $0.05 from tariff refunds, so by our calculation it was about $2.05 without them.
• Services. Growth slowed to 9.8% and is guided to 8% to 9%. Apple pointed to more than 2.5 billion active devices, growing App Store traffic, Apple Pay in India and AI services.
• Products. Mac revenue rose almost 24% to $10.79 billion, while iPad fell more than 10% to $6.3 billion, which management tied to supply limits and a tough comparison.
• China. Greater China revenue rose 21% to a quarterly record, though it was below the $18.75 billion estimate in our earlier report.
• AI. Ternus reaffirmed the iPhone's central role in AI without a clear roadmap for more autonomous AI agents. Usage limits on server-based AI features could encourage heavier users to move to iCloud+.
• Capital. Apple bought back $24 billion of shares in fiscal Q4, and about $28 billion with dividends. Parekh said Apple no longer uses net cash neutral as a target, which gives it more flexibility to treat cash and debt separately.
• iPhone Duo. The device is supply-constrained, and management said it is hard to predict when supply and demand will balance, which leaves its holiday-quarter contribution unclear.

The stock

Apple closed the regular session down 1.8% at $338.32 and traded near $328.85 after hours. It remains up more than 24% for the year.

What to watch

• Tuesday's open. Whether the after-hours drop holds.
• Memory pricing. Further cost increases and Apple's pricing response.
• Services. Whether growth holds above 8%.
• Related coverage. See our Apple results report, the Week Ahead preview and Oracle's share sale.

Sources: Apple's investor relations site, its fourth-quarter fiscal 2026 results and earnings call. Analyst estimates and after-hours prices come from published reports and may differ by source. Items labeled by our calculation are our own arithmetic. This article is informational only and is not investment advice.