Apple reported stronger-than-expected revenue and earnings in its fiscal fourth quarter, the first set of results since John Ternus replaced Tim Cook as chief executive on 1 September. The company posted revenue of $114.48bn, up 12% year on year and ahead of the $113.39bn analyst consensus, with earnings of $2.10 a share against a forecast of $1.99, according to SiliconANGLE. The Guardian reported net income of $30.71bn, or $2.10 a share, up from $27.47bn, or $1.85 a share, a year earlier, and noted that the result bucked a weaker quarter for Alphabet, Amazon and Intel.
The headline beat rested heavily on the iPhone. Apple booked $57.58bn in iPhone revenue, a 17% annual increase, as The Verge reported, and that record came without a new standard model in the September refresh. The quarter included only eight days of sales of the pricier iPhone 18 Pro and Pro Max and none of the new folding iPhone Duo, whose preorders fell outside the reporting period, according to SiliconANGLE. Apple had raised prices across older models at the same time, and The Verge noted that buyers did not appear to punish the company for it.
Where the quarter was soft
The picture was less even elsewhere. Services revenue reached $31.57bn, just below the $31.58bn consensus and growing less than 10%, its slowest rate since September 2022, SiliconANGLE reported. iPad sales fell more than 10% to $6.3bn against a $6.7bn forecast, a miss Ternus attributed to supply constraints and a difficult comparison with the prior year. Mac revenue was the clearest secondary bright spot at $10.79bn, up almost 24% and comfortably above the $9.61bn expected, following the August launch of new Mac Studio and Mac Mini models. The guidance did more damage than the revenue line. Chief financial officer Kevan Parekh said Apple expects revenue growth of between 7% and 10% in the current quarter, which includes the Christmas period, against analyst expectations of 11.4%, and guided gross margin to 45% to 46%, down from the fourth quarter, according to SiliconANGLE. Apple's stock fell almost 3% on the report, though it remains up more than 24% in the year to date against a gain of just over 10% for the S&P 500.The China question and the AI discount
The sources diverge on one point worth flagging. The Guardian, citing Emarketer analyst Jacob Bourne, described record iPhone revenue and strong growth in China as evidence of the resilience of Apple's business. SiliconANGLE's account of the same call makes no mention of China growth and instead emphasises the iPhone sales miss against expectations, the services slowdown and the weak outlook. Readers should treat the China characterisation cautiously until the geographic breakdown is confirmed in Apple's filed results. What the sources agree on is the valuation argument. Oppenheimer analyst Martin Yang put Apple at about 36 times next year's expected earnings, a premium to the wider technology market even though earnings are expected to grow only 1% this year, SiliconANGLE reported. Bourne told both publications that Apple's restrained approach to AI infrastructure spending has preserved cash flow, and that partnerships, including with Alphabet, may strengthen its AI capabilities without the financial risk borne by peers. The flip side, he told SiliconANGLE, is that AI-enabled devices such as smart glasses could eventually challenge the iPhone's central role in iOS. Ternus gave little away on monetisation. Asked whether Apple would offer more AI features through subscriptions or services, he declined to detail future plans but said the company has "lots of opportunities" and pointed to hardware. "One example is the hardware side, right?" he said. "It offers a compelling reason for upgrading or switching." On costs, he told CNBC in an interview cited by The Verge that Apple saw higher memory costs than in the June quarter, partly offset by inventory benefits and lower costs on non-memory components.Why It Matters
For suppliers and hardware planners, the read-across is that Apple's demand is holding up at the premium end even as the product mix narrows. A Pro-only refresh producing record iPhone revenue suggests consumers will absorb higher prices when the flagship is compelling, which supports component orders tied to high-end models. The iPad miss and the supply-constraint explanation are the counterweight: Apple's ability to ship is now a live variable in its own results, and the limited iPhone Duo availability, with some estimated shipment dates extending into 2027 according to The Verge, points to continued constraint on new form factors. For investors, the quarter reinforces that Apple is being valued as a cash-flow business rather than an AI growth story. That premium has held while peers absorb heavy capital spending, but it depends on services growth and on Ternus finding ways to lift innovation. A services division growing below 10% and guidance below consensus are the two numbers that test that thesis.Risks and Unknowns
The main uncertainty is regional. The sources disagree on China's contribution, and the geographic split will matter for supply-chain planning across Asian manufacturing partners. Memory costs are another open variable: Ternus confirmed they rose sequentially, and the June price increase was attributed to component costs, so further increases would pressure margins already guided lower. The iPhone Duo's shipment timing into 2027 is unresolved, and the Siri AI chatbot, which launched in the quarter, was described by SiliconANGLE as having arrived stale relative to autonomous AI agents. Whether Ternus converts hardware upgrades into AI monetisation remains unproven, and he declined to set out how.FY Outlook
The next quarter is the test. Apple has guided to 7% to 10% growth against an 11.4% consensus, so the Christmas period will show whether the iPhone 18 Pro cycle and the iPhone Duo can close that gap. Watch the geographic breakdown for China, the trajectory of memory costs against the 45% to 46% gross margin guide, and any signal on how AI features are priced. The stock's premium leaves little room for a second consecutive guidance miss.Sources and References
- The Guardian (theguardian.com)
- SiliconANGLE (siliconangle.com)
- The Verge (theverge.com)
