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Apple Shares Fall After Gross Margin Forecast Disappoints Investors
Apple shares slide as gross margin forecast for the December quarter disappoints investors.
Key points
- Apple expects a December-quarter gross margin of 45% to 46%, below the 46.3% average analyst estimate, according to LSEG.
- Apple's gross margin was 50.1% in the June period and 47.9% in the September quarter, which was boosted by 1 percentage point of tariff
- Apple COO Sabih Khan said the company's purchase obligations rose by $33 billion from the June quarter to the September period.
Why it matters. Ternus said memory pricing is continuing to increase beyond the December quarter, which could keep pressure on Apple's gross margins as it absorbs higher memory costs.
Apple's gross margin forecast for the December quarter, 45% to 46%, trails the 46.3% average analyst estimate compiled by LSEG, and shares slid 3% in morning trading Tuesday. CFO Kevan Parekh blamed higher memory costs and costs tied to the ramp of Siri AI, while CEO John Ternus called memory pricing 'unprecedented' and said it would keep rising. It would be a third straight decline after margins of 50.1% in June and 47.9% in September.
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Apple Shares Fall After Gross Margin Forecast Disappoints Investors
John Ternus delivered his first earnings report as Apple chief executive on Monday. The results were in line with expectations until the company issued its forecast for gross margin, a key metric for investors. That outlook disappointed Wall Street, and Apple's shares declined as a result. The company attributed pressure on profits to a global memory crisis. The sell-off comes as investors also weigh a broader flurry of earnings reports and the approaching midterm elections.