Apple Warns of Supply Shortages and Rising Memory Costs Amid Q3 Earnings

Apple's Q3 earnings report revealed a mixed bag of numbers. The company's revenue reached $109.4 billion, up 16% from last year, while its earnings per share came in at $2.02. iPhone sales also saw a significant boost, with revenues reaching $54.25 billion, an increase of 22%. However, Apple warned that supply shortages and rising memory costs will impact future growth.

The company attributed the rise in memory costs to a surge in demand for AI-driven DRAM and NAND prices, led by Samsung, SK Hynix, and Micron. As a result, Apple expects its memory costs to continue increasing. To mitigate this, the company is reportedly working with PrismML to compress the Alibaba Qwen model below 4GB, enabling on-device AI inference and reducing cloud dependence.

Despite the challenges ahead, analysts remain bullish on Apple's prospects. TD Cowen kept its 'Buy' rating for Apple Inc., with a revised price target of $400 per share. However, others are more cautious, flagging high valuation, memory cost pressure that could hit margins, possible higher iPhone prices, and upcoming CEO transition.