Apple results beat Wall Street expectations on strong iPhone sales

Apple AAPL-Q on Monday reported results that beat Wall Street expectations, driven by early demand for its iPhone 18 Pro lineup and price increases that helped offset the blow of rising memory-chip costs.

Apple said fiscal fourth-quarter sales were US$114.48-billion, above analyst estimates of US$113.39-billion, according to LSEG data. Profit for the fourth quarter was US$2.10 per share, above analyst estimates of US$1.99 per share even when excluding 5 cents per share from tariff refunds.

Apple shares were down roughly 1 per cent in volatile after-hours trading following the release of results.

The results come as Apple experiments with a string of firsts under new CEO John Ternus, who took over in September. After nearly two decades of launching most of its new iPhones each autumn, Apple this year is spacing those out, with iPhone Pro and Duo models shipping this year and other iPhone models expected next year.

Apple also released a bevy of new non-iPhone products in the current holiday shopping quarter, including its first touchscreen laptops and its first smart-home hub. The steady drumbeat of releases, analysts said, is meant to smooth out Apple’s yearly revenue cycle, which for decades showed a huge boom in holiday-quarter sales of new iPhones that petered out by late summer as consumers came to anticipate new models.

Apple in recent weeks has grappled with customer reports of cracked screens on the iPhone Duo, the company’s first foldable phone, which sold out within hours online and spurred lines at Apple’s stores last month.

iPhone Duo supply constraints

In an interview with Reuters, Ternus said that “a very small percentage” of iPhone Duo units had been returned for display issues and that Apple is replacing them. He said the company is overall unable to meet demand for the devices, with no timeline for when Apple will catch up.

“Duo is constrained as of today,” Ternus said. “The ramp is going well, and we’re working hard to get it to as many customers as quickly as possible, but at this point, we’re not able to predict when supply and demand will be in balance.”

Apple unveils first touchscreen laptops, abandoning resistance to the technology

Apple said that fourth-quarter iPhone sales, which included iPhone 18 Pro models but not Duo sales, were US$57.58-billion, above analyst estimates of US$56.54-billion, according to LSEG data.

The strategy change comes as Apple faces headwinds from an AI-driven memory-chip price spike that previous CEO Tim Cook likened to a 100-year flood that could dampen the margin boost that Apple derives from selling storage upgrades.

Price rises offset chip costs

As it launched its new iPhone 18 Pro models, Apple also increased the price of iPhone 17 models by US$100 and increased some MacBook prices, helping soften the blow of memory-chip prices that continued to rise.

“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. “These price increases provided some offset.”

Apple said that gross margins were 47.9 per cent, above analyst estimates of 47.5 per cent, according to LSEG data.

Another key question for Apple’s margins is the costs of its new AI-infused Siri, which Ternus said is now fielding 2.5 billion requests per day.

“Now we have the Siri that we always wanted, which we really built from the ground up,” Ternus said.

Apple said that sales of its Mac computers, which have gained popularity among tech enthusiasts as a platform for hosting AI agents, were US$10.79-billion, above estimates of US$9.61-billion.

Services revenue was US$31.57-billion, in line with analyst estimates of US$31.58-billion, according to LSEG data. Sales of iPads and wearables were US$6.23-billion and US$8.30-billion, respectively, both below estimates of US$6.70-billion and US$9.06-billion, respectively.