🍎Apple Posts Record Year as Memory Costs Threaten Holiday Margins

Your Apple stock thesis just got more complicated

Apple just posted its best fiscal year ever for revenue and EPS, and the stock still fell premarket Tuesday. The reason: management warned rising memory costs will squeeze margins in the holiday quarter. Bottom line: the hardware machine is firing, but the cost curve is moving the wrong way. If you build on Apple platforms, this matters for two reasons. First, Apple is making its server-side AI features, like Siri AI and intelligent photo editing, metered with usage limits, and customers who need more will buy expanded access later. Second, Apple wants you running models locally on Mac hardware, even models from other companies. Apple also collects fees when users subscribe to third-party AI apps. Expect the platform to get more expensive to build on before it gets cheaper. The numbers: iPhone revenue rose 17.5% to a September quarter record of $57.6 billion. Mac revenue climbed 24% to $10.8 billion, its highest in four years. Operating expenses rose 21% to $19.2 billion, and capex hit $2.2 billion, which is still a fraction of what peers spend. Apple was on pace for over $1 billion in App Store fees from generative AI apps in 2026. What to watch: Apple hasn't said how much of its growth comes from AI demand versus higher prices. That split will decide whether this is a durable story or a pricing story.