Apple's Record-Breaking Earnings Come With an Immediate Stock Dip: No Heavy AI Burn Yet, But Memory Prices Are Surging

Apple has just closed out the best fiscal year in its history.

As reported by The Verge, Apple's iPhone revenue in fiscal Q4 rose 17.5% year-over-year to hit $57.6 billion, setting a new all-time record for the quarter ending in September. Mac revenue grew 24% year-over-year to $10.8 billion, marking its highest level in four years. Looking at the full fiscal year, both Apple's total revenue and earnings per share hit the best figures in the company's history.

Yet right after the earnings release, Apple's stock price fell in Tuesday's pre-market trading. The issue does not lie on the demand side: Apple warned that rising memory costs will squeeze its profit margins for the holiday season. That means its hardware sales are performing solidly, but cost pressures have arrived earlier than expected.

What makes this earnings report notable is that two parallel storylines hold true at the same time. First, the ongoing AI boom is still propping up Apple's hardware sales. Second, Apple has not dumped large chunks of its budget into AI infrastructure the way some of its competitors have. Expenditures on data centers, GPUs and power are eating into the profit statements of its industry peers. Apple continues to profit from the AI boom while steering clear of the most heavy capital expenditure burdens.

At least from this earnings report, Apple's AI business operation looks more like profit management. It has not joined the most aggressive infrastructure buildout race. Investors will be focusing on two things next: whether the strong demand for iPhones and Macs can be sustained, and how much profit margin the rising memory prices will eat away during the holiday season.

Original link: https://www.theverge.com/ai-artificial-intelligence/1025245/apple-earnings-q4-ai