Apple shares fall 4% premarket on weaker holiday margin outlook

What happened

Apple shares fell about 4.4% to roughly $323 in premarket trading Tuesday, according to The Crypto Basic and Coinpedia, after the company's earnings call pointed to a weaker gross margin for the holiday quarter. The stock had already declined in two consecutive regular sessions, closing Monday at $338.32.

The margin guidance came alongside stronger-than-expected fiscal fourth-quarter results. Apple reported revenue of $114.5 billion, up 12% year over year and above the roughly $113.4 billion analysts had expected, while diluted earnings reached $2.10 per share versus estimates of $1.99. That figure included a $0.05-per-share benefit from tariff refunds.

On the call, CEO John Ternus disclosed a $33 billion increase in manufacturing purchase obligations, a measure covering planned purchases from component suppliers and contract manufacturers. Apple's annual filing, released Tuesday, put the September total at $89.7 billion, up from $57 billion in June, with $82.7 billion due within 12 months, Blockonomi reported.

Apple guided December-quarter gross margin to 45%, 46%, compared with 47.9% in September and below the roughly 47% analysts had modeled. Chief Financial Officer Kevan Parekh said higher memory costs would account for most of the sequential decline, with the rollout of Siri AI features also weighing through cloud-service costs and deferred device revenue.

Why it matters

The session was Apple's first earnings report since John Ternus replaced Tim Cook as CEO in September, making the margin outlook an early test of how investors view the new leadership. Ternus described the year as the company's best fiscal year on record despite supply limits and currency pressure, according to Coinpedia.

Memory pricing is the central concern. Ternus called current memory prices unprecedented and said the company expects them to keep rising beyond December. Chief Operating Officer Sabih Khan said memory-related constraints could limit Mac and iPad supply in the December quarter, with demand running ahead of Apple's expectations. Apple has raised prices on several Mac, iPad and iPhone models to help offset component costs.

Wall Street revised its views after the report. Goldman Sachs analyst Michael Ng cut his price target to $380 from $390 while keeping a Buy rating, citing strong iPhone and Mac demand alongside rising memory and AI costs. Morgan Stanley's Erik Woodring lowered his target to $350 from $355 while maintaining an Overweight rating, pointing to slower Services growth and trimming his fiscal 2027 earnings-per-share estimate by $0.05 to $9.85.

What the data shows

Key figures from the reports: fiscal fourth-quarter revenue of $114.5 billion, up 12% year over year against expectations of about $113.4 billion; diluted earnings of $2.10 per share versus $1.99 expected, including a $0.05 tariff-refund benefit; December-quarter gross margin guidance of 45%, 46% versus 47.9% in September and about 47% expected; manufacturing purchase obligations of $89.7 billion in September, up from $57 billion in June, with $82.7 billion due within 12 months; inventories of $14.54 billion, up about 31% from $11.09 billion in June; and December-quarter revenue growth guidance of 7% to 10%.

Separately, Apple Tokenized bStocks (AAPLB) traded at $325.64, down 5.22% over the preceding 24 hours, according to CoinMarketCap figures cited by The Crypto Basic and Blockonomi. AAPLB is a tokenized instrument linked to Apple shares, and its 24-hour change is separate from the Nasdaq-listed stock's performance.

Background

Manufacturing purchase obligations are not debt or expenses already recorded in Apple's financial statements; they represent future purchases from suppliers and contract manufacturers. Apple's June filing showed $56.2 billion of the obligations payable within 12 months, but the company has not yet provided an updated payment breakdown for September. Although the disclosure came during a discussion of memory-chip supplies, Apple did not specify how much of the additional commitments related to memory.

Apple's inventories rose to $14.54 billion in September from $11.09 billion in June, an increase of about 31%. Lower-cost inventory carried into the quarter and savings on non-memory components have provided some relief, though management expects the inventory benefit to diminish over time. September's 47.9% margin included roughly one percentage point from tariff refunds; excluding that, the figure would have been about 46.9%, narrowing the gap with the holiday forecast.

Morgan Stanley said the December-quarter margin guidance was about 100 basis points below its forecast largely because it had assumed roughly $1 billion in tariff refunds; excluding that assumption, the guidance was nearly in line with its expectations. Apple expects December-quarter revenue to grow 7% to 10% year over year, a forecast that accounts for continued supply constraints. Coinpedia noted that iPad sales missed estimates, and that Apple stock remains up about 25% this year.

What is still unclear

Apple has not disclosed how much of the $33 billion increase in manufacturing commitments relates to memory chips, nor has it provided an updated maturity breakdown for the September balance. The company also has not quantified how much of the margin pressure stems from Siri AI cloud costs versus deferred device revenue.

What to watch

Investors will be watching whether memory prices continue climbing beyond December, as Ternus expects, and whether supply constraints materially limit Mac and iPad sales during the holiday quarter. Also in focus: how quickly the inventory benefit fades, whether Apple raises prices further, and whether Services growth slows as Morgan Stanley cautioned. The New York Stock Exchange separately expanded its tokenized stock plans this week, though that proposed service is distinct from AAPLB and has no announced launch date.

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