Apple posts record $114.5 billion quarter, but margin warning sinks shares

The new CEO's first report: It was Apple's first earnings call with John Ternus as chief executive. He succeeded Tim Cook on Sept. 1.

The catch: On the earnings call, Apple forecast revenue growth of 7% to 10% for the October-December holiday quarter, above the 6.1% analysts polled by LSEG expected, CNBC reported. But it also forecast a gross margin, the share of each sales dollar left after the cost of making products, of 45% to 46%, below the 46.3% analysts expected and down from 47.9% this quarter, and services growth of 8% to 9%. "What we're seeing with memory pricing right now is unprecedented," Ternus said on the call, adding that Apple expects memory prices to keep rising after December, Reuters reported. Apple shares fell about 4% on Tuesday, Reuters said.

Scorecard, results vs. analysts' estimates (LSEG, via CNBC): Revenue $114.48 billion vs. $113.39 billion. Earnings per share $2.10 vs. $1.99. iPhone $57.58 billion vs. $56.54 billion, up 17% from a year ago. Mac $10.79 billion vs. $9.61 billion, up about 24%. iPad $6.23 billion vs. $6.7 billion, down 10%. Wearables, home and accessories $8.3 billion vs. $9.06 billion, down nearly 8%. Services $31.57 billion, an all-time high but growth under 10%, the slowest since 2022. Greater China sales rose 21% to $17.53 billion, though that was below the $18.75 billion Bloomberg's consensus expected, Yahoo Finance reported.

The strongest case for optimism: Apple beat estimates on revenue, profit, iPhone and Mac, and it is spending far less on AI data centers than its rivals, with $2.24 billion in capital spending this quarter, below the $3.33 billion analysts expected, according to CNBC. It generated $28 billion in operating cash and returned the same amount to shareholders, Apple said. The strongest case for caution: Barclays, which rates the stock underweight, said it remained "cautious" over iPhone uncertainty and "limited monetization of AI," and Monday's forecast points to slower services growth and thinner margins just as Apple's prices are already higher. Gross margin this quarter also got a boost of about 1 percentage point from tariff refunds, CNBC noted.

What's still unknown: These results include only eight days of iPhone 18 Pro sales, which began Sept. 18, and none from the folding iPhone Duo, The Verge reported. Apple has also acknowledged display cracks on a "small number" of Duos, CNBC noted. How well the Duo sells over the holidays, and whether memory prices keep rising, will shape the next quarter. Apple and Nvidia were neck and neck at about $4.91 trillion each in market value at Monday's close, CNBC said, before Tuesday's drop put Apple on track to lose more than $170 billion in value if losses held, according to Reuters.

Sourcing: Apple's Nov. 2, 2026 press release for the headline results, records and dividend; CNBC's live coverage (as corrected; an earlier CNBC version misstated the holiday-quarter estimate) for analyst estimates (LSEG), product-line results, December-quarter guidance from the earnings call and analyst comments; Reuters for Tuesday's share move and Ternus's memory remarks; Yahoo Finance for the China estimate; MacRumors for year-ago and full-year comparisons; The Verge and AP for context. Guidance figures are Apple's forecasts, not results. iPhone Duo sales are not in these results. Photos are file images, not from Monday.