Apple closes fiscal Q4 with $114.5 billion in revenue — and memory is the protagonist

Apple reported on Monday, November 2, the results of its fiscal fourth quarter of 2026 — the first as a company under the leadership of new CEO John Ternus. The top-line numbers were solid: $114.5 billion in revenue, a 12% increase year over year, and earnings per share of $2.10, surpassing market expectations of $1.99. The iPhone hit a September quarter record, with $57.58 billion in revenue, a 17% jump year over year, without the company having launched a new standard model.

Behind the impressive numbers, however, runs a tension thread that the company no longer tries to hide. Apple's inventory stock jumped 154.3% year over year, from $5.72 billion to $14.54 billion, a 31.1% increase in the quarter alone. The company is hoarding memory, yes, but not to fuel sales — to protect itself from a chip market that, in Ternus' words, is in an 'unprecedented' situation.

The invisible weight of memory

Memory costs were solely responsible for the roughly one percentage point sequential decline in product margins, excluding the effect of tariff refunds, which added approximately one percentage point to the company's gross margin. Without them, the company's gross margin would have fallen to about 46.9%, not 47.9%. Product margin fell from 40.1% to 37.2%, a 2.9 percentage point decline.

'What we're seeing with memory pricing right now is unprecedented,' Ternus told analysts on the earnings call. 'As we said in the third quarter, we did see higher memory costs compared to the second quarter, which were partly offset by the benefit of carrying inventory and lower costs in certain non-memory components.'

What makes the current situation different from any previous supply crisis is the scale and the cause. Demand for high-bandwidth memory (HBM) and RDIMM for AI servers is consuming an ever-larger share of global manufacturing capacity. TrendForce estimates that HBM and RDIMMs combined accounted for 51% of DRAM bit supply in 2026, and Samsung placed HBM's share at about 20% of the industry's wafer capacity — and nearly 30% next year.

This means the chips Apple uses in its iPhones and Macs compete directly with Google, Meta, and Amazon data centers for the same capacity. When Meta raised its capex forecast to as much as $145 billion in 2026, it wasn't by chance: every modern AI data center requires massive amounts of memory, and the three chip manufacturers that produce DRAM — Samsung, Micron, and SK Hynix — are prioritizing AI servers above all else.

The inventory strategy: a short-term solution

Apple has been accumulating inventory since at least the second quarter of 2026, when outgoing CEO Tim Cook described the situation as 'a hundred-year flood on memory pricing.' At that time, inventory had already doubled from $5.72 billion to $11.09 billion. In the quarter just closed, inventory jumped again to $14.54 billion.

This is a dramatic break from the supply chain philosophy Apple is known for. Cook built the company's reputation on lean inventory, selling products before they were fully manufactured. Now, the company is literally stockpiling components — memory in particular — to ensure it can maintain production throughout the year.

Ternus admitted that the benefit of carrying this inventory 'will diminish over time,' and that beyond the December quarter, it expects 'memory costs continuing to increase.' The company did not mention whether it plans to raise device prices again, but it has implemented price increases in June for Macs and iPads, and in September for iPhones.

Ternus' first quarter: between record and challenges

For John Ternus, the first earnings report as CEO is a mix of celebration and warning. He described the September quarter as the 'best fiscal year ever' and highlighted the launch of the iPhone Duo, the company's first foldable phone, as a transformative milestone.

Apple as a company has a record fiscal year of $478.8 billion in revenue, up 15% from $416.2 billion the prior year. Total net profit was $30.7 billion, with $28 billion returned to shareholders in the form of dividends and buybacks in the quarter.

But the outlook for the holiday quarter — historically the most important of the year — is cautious. The company predicts gross margin of 45% to 46%, below Wall Street consensus of 47%. The difference between the projection and market consensus is almost entirely attributable to two factors: higher memory costs and additional costs related to the Siri AI launch.

The Siri AI, in turn, will impact margins in two ways. First, running the service will increase cloud costs. Second, Apple will have to gradually recognize revenue from devices that include Siri AI over their useful lives, rather than accounting for it all at the time of sale.

What to expect next

The memory situation has no predictable resolution date. SK Hynix said in August that 2027 will likely be 'the worst year in the industry's history,' and forecast that customer demand will remain above supply capacity 'even beyond 2030.' McKinsey sees few viable short-term solutions, while J.P. Morgan estimates DRAM prices have already risen more than 400% since early 2024 and should continue rising.

If Apple maintains current prices, its margins — already historically high for the sector — will come under pressure. If it raises prices again, it will test the limits of consumer loyalty. And, in any scenario, the iPhone Duo continues with screen cracking issues that the company has still not been able to resolve — which, combined with memory scarcity, means that Ternus' first quarter will be remembered more for tensions than triumphs.

The question is not whether Apple will be able to navigate the memory crunch. It's whether it will do so without compromising the margin that has always been its greatest advantage — and without the iPhone Duo becoming the story it wishes it hadn't had.

Sources: TechCrunch, Fortune, 9to5Mac

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