Apple told investors on 2 November 2026 that it expects gross margin of 45% to 46% in the December quarter, under the 46.3% analysts averaged. It pointed mainly to higher memory costs, plus some costs from ramping up Siri AI. Shares slid about 3% in extended trading, on John Ternus's first earnings report as CEO after he took over from Tim Cook on 1 September.
“I think at this point, with everything we've achieved, it just feels like we've never been more confident that the best is yet to come”
John Ternus, Apple CEO, to CNBC, to CNBC · cnbc.com ↗
The quarter just reported brought record revenue of $114.5 billion, up 12% on a year earlier. Company gross margin came in at 47.9%, with products at 37.2%. Tariff refunds added about a point; without them margin would have slipped about a point from the previous quarter, on memory. December revenue is guided up 7% to 10%, ahead of a 6.1% analyst estimate.
Siri AI weighs on margins in two ways, according to CFO Kevan Parekh. Server-side cloud costs for it sit in services cost of sales, and part of the revenue from each device is deferred and recognised over the device's life, the same treatment Apple gives bundled services such as Maps and iCloud. Most of the sequential decline, though, is expected to come from memory. Apple called memory pricing unprecedented, though reports differ on whether Ternus or Parekh said so, and expects costs to keep rising beyond December as the cushion from cheaper inventory shrinks.
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Apple's Siri assistant first appeared on the iPhone 4s in October 2011, the same month Steve Jobs died, so the assistant now being rebuilt around AI is more than a decade old.
Memory costs have been a pressure on the company for months. In about late June 2026 Apple raised Mac and iPad prices, saying it had never seen a component price rise this much, this quickly, and blaming the AI-driven memory shortage. For the June 2026 quarter it reported 50.1% gross margin, about two points of which came from tariff refunds; without them margin fell from 49.3% to 48.1%, and Tim Cook described the memory market as a "100-year flood".
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Apple said price rises, inventory carried in and cheaper non-memory parts offset some of the pressure, and it did not say whether prices will rise again. Mac and iPad supply will be constrained in December by memory. On Siri AI, Apple said running on the device is very efficient but server inference costs money, and the mix is too early to call. Investors want to know if Apple will earn more from AI through subscriptions.
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