❯ Apple revenue rises 12% as holiday-quarter gross margin is expected to fall to 45%–46%

The first earnings report under John TernusApple reported November 2 revenue of $114.477 billion for its fiscal fourth quarter ended September 26, up about 12%. Net income reached $30.711 billion, with diluted earnings of $2.10 per share. It was John Ternus’s first quarterly report as CEO. Apple’s announcement puts full-year sales at approximately $479 billion, a record.

iPhone, Mac and Services expandThe financial statements show quarterly iPhone revenue of $57.583 billion, Mac revenue of $10.792 billion and Services revenue of $31.573 billion. Greater China sales rose about 21% to $17.539 billion, although they missed the analyst forecast Reuters cites from Visible Alpha. iPad and Wearables, Home and Accessories also declined.

Memory costs weigh on gross marginApple expects 45%–46% gross margin in the December holiday quarter, below the latest quarter’s 47.9%. Management expects memory costs to keep rising and is using some device-price increases and supply commitments to ease the pressure. AI-driven demand for memory is also transmitting costs to phones and personal computers.

Cloud AI brings pricing and usage limitsApple said Siri AI, which runs partly in Google’s cloud, also affects margins. It plans to raise iCloud+ subscription prices to offset AI costs but has not announced specific pricing. Ternus said some limits would apply to server-model features including Siri AI and intelligent photo editing, bringing ongoing AI costs into subscription design.

▮ SIGNALOngoing AI costs are shaping subscription prices and usage limits while memory demand also affects hardware margins.