After Apple announced its financial results for the fourth quarter ending September 2026 on November 2, despite revenues and profits exceeding Wall Street's expectations, its stock price remained under pressure. Investors are more concerned about Apple's cautious outlook for gross margins during the holiday season, rising component costs, and signs of slowing growth in its services business.
Apple's revenue hits a record high, iPhone sales are strong
Apple announced quarterly revenue of $114.48 billion, a 12% increase from the same period last year, exceeding analysts' expectations of around $113.39 billion. Earnings per share were $2.10, higher than Wall Street's forecast of $1.99, representing a year-on-year growth of 14%.
The business of company iPhone is the main driving force for growth, with revenue reaching $57.58 billion, an increase of about 17% compared to the same period last year. The revenue from the Mac business also exceeded expectations, reaching $10.79 billion; the service business revenue set a record of $31.57 billion.
On an annual basis, Apple's revenue for fiscal year 2026 amounted to approximately $479 billion, also setting a new company record.
Why Does Apple's Stock Price Fall Despite Strong Earnings?
The negative reaction in the market may stem from investors' concerns about Apple's profitability during the important holiday shopping season. Management expects the gross margin for the December quarter to be between 45% and 46%, which is lower than the 47.9% in the September quarter.
With the growing demand from artificial intelligence infrastructure providers, the rise in memory chip prices has become a major challenge, which has pushed up the cost of components.
Apple also expects service business revenue to grow by 8% to 9% in the holiday quarter, which is lower than analysts' forecast of around 10.7%. Meanwhile, revenue in the Greater China region reached $17.54 billion. Although it increased year-over-year, it still fell short of Wall Street's expectation of around $18.58 billion.
Strong iPhone demand expected to support the next quarter
Despite concerns regarding profitability, Apple expects its total revenue for the December quarter to grow by 7% to 10%. iPhone Demand for Pro remains strong, and Apple's first foldable phone iPhone Duo reportedly faced supply constraints after its launch in October.
This financial report also marks John Ternus (John Ternus)'s first time facing the financial results as CEO since he took over from Tim Cook (Tim Cook) in September.
Investors will now be watching whether stronger product sales can offset the rising manufacturing costs and support profitability during the holiday season.
Danielle Walgenbach
Danielle is a journalist who covers cryptocurrency and financial markets, with over four years of reporting experience. She specializes in breaking down complex financial and economic topics into clear and solid news stories.
