Apple shares fell in after-hours trading despite beating Wall Street estimates for fiscal fourth-quarter revenue and earnings, as management's outlook pointed to a near-term squeeze on gross margins from rising memory costs and spending tied to its Siri AI rollout. The reaction came after Apple's valuation climbed to historically elevated levels following a four-month rally that briefly pushed its market value to $5 trillion.
Apple reported fiscal fourth-quarter revenue of $114.477 billion for the period ended Sept. 26, 2026, up 11.72% from a year earlier. The result exceeded the $113.47 billion consensus estimate and came in above the top end of the company's prior 9% to 11% growth outlook.
Net profit rose 11.81% to $30.711 billion, while diluted earnings per share increased 13.51% to $2.10, above the $2.00 consensus estimate. Yet the report did little to sustain an initial gain in extended trading. Apple's shares moved from a brief 0.4% rise to a decline of more than 4%, before trading at $328.81, down 2.81%, at 9:30 a.m. Beijing time.
The selling reflected the gap between the quarter's strong headline figures and Apple's more cautious outlook for the December period. Chief financial officer Kevan Parekh said the company is exhausting lower-cost component inventory and is now paying more for memory chips, a cost pressure spreading across consumer-electronics makers as demand for advanced computing hardware rises.
Margin guidance shifts attention to costs
Apple reported a 47.89% gross margin in the September quarter, up from 47.18% a year earlier. The figure included roughly a one-percentage-point benefit from tariff refunds, according to the company.
For the December quarter, Parekh guided gross margin to a range of 45% to 46%, implying a decline of two to three percentage points from the latest result. Apple attributed the expected decline to higher memory prices and costs associated with launching Siri AI features.
That outlook places the focus on whether Apple can preserve its profitability while incorporating more expensive components and funding AI services. The company's hardware gross margin was 37.20% in the fiscal fourth quarter, far below the 75.95% margin reported by its Services segment. A reduction in hardware profitability can therefore weigh heavily on consolidated margins, particularly during a quarter dominated by iPhone sales.
Apple's inventory reached $14.541 billion at the end of the quarter, up 154.30% from $5.718 billion a year earlier. Higher inventory can support product launches and supply availability, but it also leaves a company more exposed when component prices are rising or demand shifts unexpectedly.
iPhone and Mac sales led the quarter
The iPhone remained Apple's largest source of revenue, generating $57.583 billion in the quarter, up 17.46% from a year earlier and above the $56.49 billion market estimate. Apple said the result was a record for a September quarter.
The iPhone 18 Pro line launched on Sept. 18, leaving roughly nine days of sales in the reported period. The iPhone Duo, announced in September, did not reach stores until Oct. 23 and therefore made no contribution to fiscal fourth-quarter revenue. Its early sales will instead be reflected in the December-quarter results, making that period a more complete test of demand for Apple's newest phone range.
Mac revenue climbed 23.68% to $10.792 billion, beating a $9.7 billion market estimate. The performance provided a second source of hardware growth beyond the iPhone and helped Apple deliver its fastest annual revenue growth since 2021.
Other product categories were weaker. iPad revenue declined 10.40% to $6.229 billion, while wearables, home and accessories sales fell 7.91% to $8.300 billion. Both results were below market expectations, limiting the contribution from product lines that Apple has relied on to diversify beyond the iPhone.
Greater China revenue totaled $17.539 billion, a 21.02% increase from a year earlier. Sales in the region declined 6.8% from the prior quarter's $18.82 billion and were about 6.5% below the $18.75 billion estimate, according to the figures provided. The year-on-year expansion shows a recovery from the comparable quarter, while the sequential decline leaves the December period under close scrutiny following the newest iPhone launches.
Services growth slows below 10%
Services revenue reached a record $31.573 billion, but growth slowed to 9.82% year over year. Apple said this was the first time in three years that annual Services growth had dropped below 10%.
Management projected Services growth of 8% to 9% for the December quarter, below a 10.7% market expectation. Because Services produces much higher margins than hardware, slower growth in the division compounds concern over the company's lower consolidated-margin forecast.
Apple spent $11.730 billion on research and development during the quarter, a 32.30% increase from a year earlier. The rise coincides with Apple's AI product plans and comes under new chief executive officer John Ternus, who succeeded Tim Cook in September. The latest earnings release was the first issued under Ternus's leadership.
Record annual cash flow supports buybacks
For fiscal 2026, Apple reported record revenue of $478.834 billion, up 15.06%, and net profit of $132.175 billion, up 18.00%. Operating cash flow rose 30.15% to $145.097 billion.
Capital expenditures fell about 29% to $9.041 billion from $12.715 billion in fiscal 2025, helping free cash flow increase nearly 38% to $136.056 billion. Apple returned substantial amounts of that cash to shareholders, reporting $86.390 billion in stock repurchases and $15.721 billion in dividend payments during the fiscal year.
The cash figures distinguish Apple from large technology peers directing increasingly large sums toward data centers and computing infrastructure. Apple's model has remained less capital-intensive, though its increased research spending and expected Siri AI costs indicate that its AI strategy will still require meaningful operating investment.
Before the earnings report, Apple had gained 25% from a late-June low, adding about $1 trillion in market value over four months. Its forward price-to-earnings ratio stood at 36, placing it in the 99th percentile of its own historical range and at roughly twice the S&P 500's multiple, according to the supplied figures.
That valuation leaves little room for a slower Services business or a sharper-than-expected margin decline. Apple's results showed resilient demand for its flagship devices and record annual cash generation, but the market reaction showed that the next quarter's costs and profit mix now carry more weight than the September-quarter beat.
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