Apple earnings on Monday showed a company that spent about $9 billion on capital expenditures in its entire fiscal year, less than a fifth of what Alphabet spent in one quarter, and rising memory chip prices still found a way into its margins.
Apple reported record September quarter revenue of $114.5 billion, up 12%, and diluted earnings per share of $2.10, up 14%. It was the first report under CEO John Ternus, who took over from Tim Cook on Sept. 1.
The short answer: Apple beat Wall Street on revenue and iPhone sales without joining the data center spending race. The cost pressure showed up somewhere else, in pricier memory chips, a lower gross margin and price increases that Ternus says Apple made reluctantly. Shares still fell after hours on a softer December quarter forecast.
How did Apple earnings compare with Wall Street estimates?
Revenue of $114.48 billion topped the $113.39 billion analysts expected, according to LSEG figures cited by CNBC. Reuters reported that earnings also beat the $1.99 estimate even after stripping out a 5 cent boost from tariff refunds. Here is how the product lines did against a year earlier, from Apple's financial statements:
- iPhone: $57.58 billion, up about 17%, a September quarter record that included only eight days of iPhone 18 Pro sales.
- Mac: $10.79 billion, up about 24%, the fastest growing line, helped by the low-cost MacBook Neo and MacBook Pro.
- Services: $31.57 billion, an all-time high but up less than 10%, which CNBC says is the slowest growth since 2022.
- iPad: $6.23 billion, down about 10%, short of the $6.7 billion estimate.
- Wearables, Home and Accessories: $8.3 billion, down about 8%, short of the $9.06 billion estimate.
Greater China grew 21% to $17.54 billion. The iPhone Duo, Apple's $2,000 foldable, went on sale Oct. 23, so none of its sales are in these numbers.
How much does Apple spend on AI capex?
Very little, by Big Tech standards. Capex (money spent on long-lived assets like buildings, servers and chips) was $2.24 billion in the quarter, below the $3.33 billion LSEG estimate, per CNBC. For the full fiscal year, Apple's payments for property, plant and equipment fell to $9.04 billion from $12.72 billion, a drop of about 29%.
Compare that with last week. Microsoft, Alphabet and Meta spent roughly $131 billion on capex in a single quarter, and Alphabet's $51.4 billion alone turned its free cash flow negative, as we covered in our Microsoft and Alphabet earnings breakdown.
Apple went the other way. It generated $145.1 billion in operating cash flow for the year, which leaves about $136 billion after capex. It handed $86.4 billion back through share buybacks and another $15.7 billion through dividends.
Where Apple is spending is research. Research and development rose about 32% in the quarter to $11.73 billion and hit $45.8 billion for the year. That is roughly five times its capex. Reuters noted before the report that Apple's reluctance to join the AI spending race has helped its stock, which was up about 27% this year heading into Monday.
Why did Apple's gross margin fall?
Memory. Gross margin (the share of revenue left after the direct cost of making products) was 47.9%, and Apple says about 1 percentage point of that came from tariff refunds. That is down from the June quarter, and without the refunds it would have missed the 47.5% LSEG consensus, CNBC noted.
Phone and PC makers everywhere are paying more for memory and flash storage, and IDC's Ryan Reith told CNBC the market for those devices has "never been worse." Cook had called the memory squeeze a "100-year flood," per Reuters. "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 said, per Reuters.
That inventory shows up on the balance sheet. Apple ended the fiscal year with $14.5 billion in inventories, up from $5.7 billion a year earlier. Apple did not say what is in that pile, but buying ahead is one way to dodge a price spike.
Apple also raised prices, including $100 more for iPhones. Ternus told CNBC the company did that "reluctantly" and that the increases helped offset higher component costs.
Is Siri AI making Apple money?
Not directly yet. The new Siri AI is a free upgrade on recent iPhones. Asked about monetization, Ternus told CNBC there are a "lot of opportunities" and pointed to hardware first: "One example is on the hardware side, right? It offers a compelling reason for upgrading or switching."
That is a different bet from rivals that sell AI by the token or by the seat. Google, for one, keeps shipping bigger frontier models like Gemini 4 Carbon. If you want to see how the models behind today's assistants stack up on price and benchmarks, our AI model comparison tool tracks them.
How did Apple stock react to earnings and guidance?
Shares fell in extended trading after CFO Kevan Parekh said December quarter revenue should grow 7% to 10%, below the 11.4% analysts polled by LSEG expected, CNBC reported. Apple also guided services growth of 8% to 9% and a gross margin of 45% to 46%, below the 47.9% it just posted.
Barclays, which rates the stock underweight, had warned in a weekend preview that the pricing benefits Apple enjoyed on memory thanks to its scale "are fading," per CNBC. Shares had already closed about 2% lower on Monday before the report, leaving Apple and Nvidia neck and neck as the world's most valuable company at around $4.91 trillion each.
Apple declared a dividend of $0.27 a share, payable Nov. 16 to shareholders of record on Nov. 12. The earnings call webcast began at 5 p.m. ET and will be available for replay for about two weeks.
Apple earnings FAQ
What was Apple's revenue for Q4 fiscal 2026?
$114.5 billion for the quarter ended Sept. 26, 2026, up 12% from $102.5 billion a year earlier. Full year revenue was a record $478.8 billion.
Did Apple beat earnings expectations?
Yes. Revenue topped the $113.39 billion LSEG estimate, and EPS of $2.10 beat the $1.99 estimate, per Reuters, even excluding the 5 cent tariff refund benefit.
How much did Apple spend on capex in fiscal 2026?
About $9.04 billion in payments for property, plant and equipment, down from $12.72 billion in fiscal 2025.
Why are memory costs hurting Apple?
A global shortage of memory and flash storage chips has raised what Apple pays per device. Apple offset part of it with inventory it already held and price increases.
In his first report as CEO, Ternus called fiscal 2026 Apple's "best fiscal year ever" in the release. The next test is whether the iPhone Duo and Siri AI can keep that going while memory stays expensive.
