Apple shares sank 8% on Friday after Tim Cook warned that climbing memory prices could squeeze the company well past the September quarter. Key Points: Apple guided to September quarter reven
Apple shares sank 8% on Friday after Tim Cook warned that climbing memory prices could squeeze the company well past the September quarter.
- Apple guided to September quarter revenue growth of 9% to 11%, below the roughly 12% Wall Street consensus.
- June quarter revenue hit a record $109.42 billion, up 16%, with earnings of $2.02 per share.
- Services and Greater China sales both missed, at $30.7 billion and $18.8 billion.
Apple reported fiscal third quarter revenue of $109.42 billion on Thursday, a 16% gain from a year earlier and the strongest June period in the company's history. Earnings landed at $2.02 per share, ahead of the $1.89 analysts had modeled, and gross margin reached 50.1%. iPhone revenue climbed 22% to $54.3 billion, a June quarter record, while Mac sales rose 29% to $10.4 billion.
Two lines still came up short. Services brought in $30.7 billion against forecasts near $31.3 billion, and Greater China revenue of $18.8 billion trailed estimates of roughly $19.5 billion, leaving the region a familiar soft spot.
Management then guided to revenue growth of 9% to 11% for the September quarter, a midpoint near $113 billion that lands below the $114.9 billion consensus and implies a slowdown, with currency movements adding to the drag.
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Cook told analysts that Apple paid more for memory in each of the past three quarters and expects to pay more again in September.
He described the market as a 100-year flood in memory pricing, with exponential increases running through the supply chain and limited flexibility to remedy it. Looking past September, he said prices could keep climbing and drive an "increasing impact on our business."
The squeeze traces back to artificial intelligence spending. Data center operators have absorbed much of the global supply of DRAM and NAND chips, leaving Apple to bid for the same parts against some of the deepest pockets in technology.
Barclayscut its price target to $245 from $253, and the selling hit a stock that had gained about 22% this year through Thursday's close.
Morningstar expects product gross margin to fall another 250 basis points in the September quarter, with further pressure carrying into fiscal 2027.
Evercore ISI analyst Amit Daryanani said long term supply agreements would give investors firmer footing on margins, and he called memory costs the central risk facing the shares.
Apple raised prices across Macs, iPads, home devices and the Vision Pro in June, its broadest such move in years, while leaving the iPhone, Apple Watch and AirPods untouched at the time. John Ternus inherits that problem on Sept. 1, when he succeeds Cook as chief executive and prepares to launch this year's iPhone lineup into a tight component market.
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