Apple Posts $114.5B Quarter as Price Hikes Counter Chip Costs

For decades, Apple’s annual revenue cycle has relied on a massive holiday surge driven by new iPhone releases, a pattern that typically faded by late summer. On Monday, the company reported that its first quarter under new leadership has broken from that traditional rhythm.

Apple posted fourth-quarter fiscal sales of $114.48 billion, surpassing the $113.39 billion consensus estimate from LSEG data. Net profit reached $2.10 per share, exceeding the $1.99 per share projection even after accounting for 5 cents per share in tariff refunds. Gross margins came in at 47.9%, slightly above the 47.5% expected by analysts.

The beat was driven primarily by the iPhone 18 Pro lineup. iPhone sales totaled $57.58 billion, outpacing the $56.54 billion estimate. To counter rising memory-chip costs, Apple raised the price of the iPhone 17 by $100 and increased prices on certain MacBooks. CEO John Ternus, who assumed the role in September, stated that these price adjustments provided a necessary offset to the higher component costs.

Ternus acknowledged the pressure from an AI-driven spike in memory prices, which his predecessor Tim Cook previously compared to a 100-year flood. “We did see higher memory costs as compared to the June quarter, which was partially offset by the benefit of carrying inventory and lower costs on certain non-memory components,” Ternus told Reuters.

The quarter also marked Apple’s first foray into foldable hardware with the iPhone Duo. The device sold out online within hours and drew lines at physical stores last month. However, customer reports of cracked screens have emerged. Ternus described the return rate as “a very small percentage” and confirmed that Apple is replacing the affected units.

Supply remains the limiting factor for the foldable. “Duo is constrained as of today,” Ternus said. He noted that while the manufacturing ramp is progressing, the company cannot predict when supply will match demand. This constraint exists alongside a broader strategy to space out iPhone launches, with Pro and Duo models shipping this year and other models expected in the following year.

Beyond the phone, Apple’s new product slate included its first touchscreen laptops and a smart-home hub. Mac sales reached $10.79 billion, beating the $9.61 billion estimate, fueled in part by interest in the platform for hosting AI agents. Services revenue held steady at $31.57 billion, matching estimates. iPad sales fell to $6.23 billion, below the $6.70 billion forecast, while wearables sales dropped to $8.30 billion against an expected $9.06 billion.

Apple’s AI-infused Siri now processes 2.5 billion requests per day. Ternus described the updated assistant as one the company “really built from the ground up.” The cost of running this service will be a key variable for future margins as the company continues to experiment with its release cadence and product mix.