To The Moon

$Apple(AAPL)$  

3 Nov 2026 | Apple FQ4 2026 results (unaudited release)

Apple says the Dec quarter will be its best for revenue in company history: guided revenue +7% to +10%. The gross margin guide is 45% to 46%.

The 45.5% midpoint would be the lowest since the Sep-2023 quarter (45.2%). A year ago the Dec quarter ran 48.2%.

Record revenue, thinner margin. My read: this is a memory squeeze Apple is paying to get ahead of, not a one-quarter blip.

Record revenue, almost flat gross profit

At the midpoints, revenue would be about $156.0B, +8.5%. Gross profit would be about $71.0B, only +2.5% on last year's Dec quarter (math is mine). Almost all of the extra revenue goes to costs.

The staircase, in points

The Sep quarter printed 47.9%, about 46.9% without one-off tariff refunds (per the CFO). The guide midpoint is about 1.4 points lower again.

The CFO said the June-to-Sept drop of about 1 point, excluding refunds, was "driven entirely by memory". Apple says the next step down is memory again, and that Siri AI cloud costs will land in services cost of sales.

A method you can reuse on any hardware name

Margin points x revenue x (1 - tax rate) / diluted shares.

One point of margin on the guided Dec quarter is about $1.56B of gross profit, about $0.09 a share after the guided ~17% tax.

Memory purchaser vs memory supplier

Apple is stocking up ahead. Inventory was $14,541M vs $5,718M a year ago, 2.54x, about 22 days of cost of sales vs about 10.

Manufacturing purchase obligations rose by $33B from June to September (per the call; the 10-K will show it). Apple is locking in supply before prices rise further.

TrendForce: conventional DRAM contract prices rose 45-50% q/q in 4Q25. TrendForce's forecast for 4Q26 is still +10-15% q/q: slower, but still up. In this cycle the supplier sets the price and the purchaser absorbs it, even when the purchaser is Apple.

Earlier today we looked at the same question from the chip side with Intel (see today's Intel post). Different seat, same lesson: in a component squeeze, margin goes to whoever owns the scarce part.

The counter-case, with real space

Revenue is still guided to a record. FY26 free cash flow was $136,056M, +37.8%. Apple says it raised prices on Mac and iPad in June and iPhone in September, and that it is early to read price elasticity.

If memory prices peak, today's stockpile becomes lower-cost inventory and the margin can recover faster than the guide implies.

What would change my mind

Dec-quarter margin at the top of 45-46%, with inventory falling, would say the squeeze was shorter than I think.

Dated tests

(a) 10-K (due 3 Nov ET, about 4 Nov SGT): inventory split (components vs finished goods) and the purchase-obligation figure.

(b) Dec-quarter print: is gross margin inside 45-46%?

(c) Same print: Siri AI costs in services cost of sales, and any AI revenue number (none given yet).

A hypothetical book, made-up units

A device maker books 100 units of revenue at a 48-unit gross profit. Memory is 10 units of cost and its price rises 50%: cost +5, gross profit falls to 43, a 43% margin. Raise the price 3% and gross profit is back to 46 (46/103 = 44.7%). Even a price rise does not fully restore the margin, which is why the guide moves before the price tags do.

Honest limits

- Unaudited release; the 10-K is not filed yet.

- The guide, the tariff-refund effect and the $33B purchase obligations come from the call, not the release.

- TrendForce figures are third-party ranges for conventional DRAM; 4Q26 is a forecast, not an outcome. I do not know Apple's own contract prices.

- I left out an EPS clean-up walk: my figure and the data desk's differ, so it is not shown until verified.

After reading this you can

- Size any margin guide in dollars and per share with one formula.

- Read inventory and purchase obligations as a signal of who holds pricing power.

- Score this read at the 10-K and the Dec-quarter print.

Question for you: when a supplier has the pricing power, do you watch the purchaser's inventory or its margin guide first?

Not advice. I may hold positions in the names mentioned.

Stop guessing. Start calculating.

Live to fight another day. 🤙

#options #tradingpsychology #riskmanagement #optionstrading