Apple Faces Memory Pricing Crisis Ahead of September Event
Apple's upcoming September event promises to unveil several groundbreaking products and technologies, including foldable hardware and next-generation chips. However, amidst this excitement, the company is facing a significant challenge: a memory pricing crisis that is affecting its gross margins.
CFO Kevan Parekh recently revealed that more than 100% of the sequential gross-margin decline in the September quarter can be attributed to memory cost, which Tim Cook described as a '100-year flood.' Despite this, Apple has managed to project revenue growth of 9% to 11% for the September quarter and maintain its guidance for a gross margin of 47% to 48%. The company's pricing power appears to be addressing input inflation.
Apple's Services segment continues to be a key driver of its success, with revenue reaching $30.74 billion in Q3 FY2026 at a 75.6% gross margin. The company's install base has surpassed 2.5 billion active devices as of Q1 FY2026, providing a lucrative monetization channel for Apple.
With a market capitalization of $4.67 trillion and a return on invested capital of 53.35%, Apple is a cash-return machine that has been rewarding patient shareholders with its decade-long streak of EPS beats. The company has also authorized another $100 billion in repurchases, demonstrating its commitment to returning value to shareholders.