Apple Shares Slide 4 Percent After Reporting Record Fiscal Year

Apple shares fell in premarket trading on Tuesday following the release of fourth quarter earnings that revealed surging memory costs. The iPhone maker reported better than expected revenue for the period, but investors reacted cautiously to margin forecasts and weaker iPad sales.

Apple shares traded 4.4% lower after the bell, while Palantir shares dropped 6% following its own third quarter results, CNBC reported. The financial update marked the first earnings report delivered by John Ternus since he took over the chief executive role from Tim Cook in September. During a conference call, Ternus warned investors about an unprecedented rise in memory chip prices as the tech sector competes heavily with artificial intelligence datacentres for hardware components. Memory costs were higher during the quarter than in the preceding June period, and executive leadership warned that expenses would continue climbing.

Despite the supply chain pressures, Ternus told CNBC that Apple had just capped off its best fiscal year ever, achieving growth despite foreign exchange headwinds and component shortages. Revenue rose 12% to $114.5 billion compared to $102.5 billion in the equivalent period a year earlier. Net earnings reached $30.71 billion, or $2.10 a share, which beat average analyst expectations compiled by FactSet. The Guardian noted that the figures included five cents a share from tariff refunds.

Analyst commentary highlighted that while hardware revenue remained strong, profitability concerns weighed heavily on market sentiment. Violeta Todorova, senior research analyst at Leverage Shares, pointed to memory expenses and the cost of rolling out Siri AI as primary pressure points. Ben Barringer, head of technology research at Quilter Cheviot, added that results were solid if slightly disappointing, noting strength in iPhone sales and Mac Mini demand. Meanwhile, CFO Kevan Parekh discussed potential future revenue streams during the earnings call, pointing to possible opportunities across third party apps and partnerships as the company explores artificial intelligence integration.

App Store performance faced ongoing regulatory scrutiny and mobile gaming headwinds across several international markets. TechCrunch reported that third party estimates earlier in the year pointed to commission revenue declines in regions such as the United States, Brazil, and Japan following legislative changes. Despite these hurdles, Apple reported a record number of paid subscriptions with double digit growth for third party applications. Looking ahead to the December quarter, executive forecasts place anticipated services growth between 8% and 9%.

Background

The latest financial disclosures arrive amid a broader industry scramble for electronic components driven by massive global investments in artificial intelligence infrastructure. For months, the technology sector has grappled with tight supplies of RAM and semiconductor components as datacentres expand rapidly to support heavy AI workloads. Apple attempted to offset these escalating component expenses by raising iPad and MacBook prices in June, followed by upward price adjustments for iPhones in September.

At the same time, Apple has navigated significant regulatory and legal challenges affecting its core services ecosystem. Legal battles initiated by companies such as Epic Games forced alterations to app marketplace payment structures, allowing alternative billing systems in various jurisdictions. Concurrently, new international regulations in multiple countries have impacted commission revenues, prompting leadership to seek fresh avenues for monetization within the digital services division.

Why It Matters

The margin pressures and supply constraints facing the world's largest hardware manufacturer could signal broader cost adjustments across the consumer technology market. As component scarcity drives up production expenses, companies may increasingly pass those financial burdens onto consumers or alter their partnership strategies to protect profitability. How Apple balances its hardware pricing and expands its software services could influence broader industry standards for mobile technology and artificial intelligence deployment.

Illustration: AI-generated image, not a photograph of the event.