Nvidia reclaimed its position as the world’s most valuable company Tuesday as Apple shares dropped nearly 4% after the iPhone maker projected fiscal first quarter gross margins of 45% to 46%, below the 46.3% consensus estimate and down from 47.9% in the September quarter. CFO Kevan Parekh attributed the narrowing margins to Siri AI ramp expenses and what he called “unprecedented” memory pricing, which he said will keep rising beyond December.
To lock in component supply, Apple increased its manufacturing purchase obligations by $33B between the June and September quarters and raised inventory 154% year over year to $14.54B. COO Sabih Khan said advanced node chip constraints are easing as more of the lineup shifts to 2 nanometer technology, leaving memory availability as the primary December quarter bottleneck for Mac and iPad. The margin pressure overshadowed a holiday quarter revenue growth forecast of 7% to 10%, ahead of the 6.1% estimate, with Services revenue projected to rise 8% to 9% amid sequential headwinds from third party licensing.
In its first quarterly report under CEO John Ternus, Apple posted fiscal fourth quarter revenue of $114.48B, up 12% year over year and above the $113.39B estimate, while EPS rose to $2.10, beating the $1.99 consensus and including a $0.05 boost from tariff refunds. Excluding a 1 percentage point benefit from those refunds, September quarter company and product gross margins fell about 1 point sequentially due to higher memory costs. iPhone revenue grew 17% to $57.58B, Mac sales rose 24% to $10.79B, and Services reached $31.57B, while iPad fell 10% to $6.23B, Wearables dropped 8% to $8.30B, and Greater China revenue rose 21% to $17.54B, missing the $18.55B estimate.