Apple forecasts holiday sales growth but warns of margin squeeze from chip shortage

Key points

• Apple projects fourth-quarter 2026 sales growth of 7-10%, exceeding Wall Street estimates of 6%, despite rising component costs.
• Gross margins are forecast to drop to 45-46% in the final quarter, down from 47.9% in the third quarter, due to memory chip shortages and AI infrastructure costs.
• Third-quarter revenue reached $114.5bn, with Mac sales hitting $10.8bn, significantly above expectations, while services revenue totaled $31.6bn.
• China sales came in at $17.5bn, below estimates of $18.9bn, attributed to supply-chain constraints limiting product delivery.
• The foldable iPhone Duo has faced delivery delays and screen crack reports, though Apple claims these issues affect only a limited number of devices.
• Apple’s stock fell 3% after-hours on margin concerns, despite the company maintaining a market valuation near $5 trillion.

Background

This report follows a broader industry trend where AI-driven data center construction has created a severe memory chip shortage. Earlier coverage noted that Micron and SK Hynix warned supply constraints would persist through 2028 and 2030, respectively, with Sandisk’s stock surging due to NAND flash demand. Apple’s current margin pressure aligns with these industry-wide supply chain disruptions, particularly as the company delayed price increases until September to maintain market share.

Why it matters

Apple’s ability to grow sales despite a 20% decline in global smartphone shipments highlights its pricing power and brand resilience. However, the margin compression signals that even tech giants with strong cash flows are vulnerable to semiconductor supply shocks. The divergence between Apple’s cautious AI spending and peers’ massive data center investments may influence investor sentiment in a volatile market.

What to watch

Investors will monitor whether Apple can sustain its market share growth in the fourth quarter despite higher prices. The delayed launch of the base iPhone model until next year complicates holiday sales comparisons. Additionally, the resolution of memory chip shortages remains uncertain, with industry leaders predicting supply-demand balance may not occur until 2030.