Apple Q4 Earnings: Ternus Debuts as iPhone 18 Pro Sales Face Memory Crisis

Key points

• Apple is expected to report revenue of $113.4 billion and EPS of $2.00, up from $102.5 billion and $1.85 a year ago.
• The fiscal quarter ended before the iPhone Duo launched on Oct 23, meaning it contributes zero sales to this report.
• iPhone 18 Pro and Pro Max sales are included, with projected iPhone revenue of $56.5 billion, up 15% year over year.
• John Ternus, who became CEO on Sept 1, will give his first extended earnings call remarks.
• Apple raised prices by $100 on iPhones, potentially impacting demand, while facing global memory and flash storage shortages.

Background

Apple has been a relative safe haven among tech stocks, up 30% over the past 12 months, outperforming peers like Microsoft, Amazon, and Google. The company recently launched the iPhone Duo, a $2,000 foldable device, which faced supply constraints and limited walk-in availability in key markets like China and Japan. The launch boosted interest in Samsung's foldables, with Samsung reporting a 45% sales surge in Europe. Apple also introduced a new smart home hub, Apple HomeView, and upgraded Macs and iPads.

How outlets are covering it

Bloomberg and LSEG consensus estimates project revenue of $113.4 billion and EPS of $2.00. CNBC notes that the iPhone Duo's late launch means it will not impact Q4 sales, but some analysts believe early adopters may have delayed iPhone 18 Pro purchases to wait for the Duo. Barclays remains cautious, citing iPhone uncertainties and fading pricing benefits from memory shortages. Bank of America warns of potential gross margin drops in future quarters due to component cost inflation. IDC highlights a 'never been worse' smartphone and PC market due to memory shortages, with smartphone shipments expected to drop 17% this year. Apple's stock has outperformed peers, partly due to its measured approach to AI capital expenditures.

Why it matters

This earnings report is critical for assessing Apple's ability to navigate global supply chain disruptions and maintain margins. Ternus's first call will signal strategic direction, particularly in China and AI monetization. The exclusion of the iPhone Duo from Q4 sales means the market will focus on iPhone 18 Pro performance and services revenue, which is expected to exceed $31.5 billion. The results will also indicate how Apple manages component cost inflation and whether its premium pricing strategy can sustain demand in a softening market.

What to watch

Investors will watch Ternus's commentary on China strategy, AI monetization, and gross margin durability. Apple is expected to release a base iPhone 18 and a follow-up to the iPhone Air early next year. The company will also face continued pressure from memory shortages, which may impact future pricing and product specifications. Analysts will scrutinize services revenue growth and the impact of tariff refunds on current margins.