Apple posts revenue growth but faces pressure from memory costs

Apple reported fiscal fourth-quarter revenue of $114.48 billion, representing a 12% year-over-year increase that outpaced analyst estimates. Earnings per share rose 14% to $2.10, supported by robust demand for iPhones and Mac computers, which offset declines in the company's wearables and iPad segments.

Despite the strong top-line performance, Apple shares declined by approximately 3% in after-hours trading. The market responded to the company's guidance, which indicated that rising memory costs and a slowdown in services revenue growth would likely weigh on future gross margins. While Apple has raised prices on several product lines to mitigate these expenses, management acknowledged that these cost pressures are expected to persist in the near term.

Operational updates included the launch of the foldable iPhone Duo, which has seen immediate supply constraints. CEO John Ternus, leading his first earnings call, framed the company's artificial intelligence strategy around the iPhone as a secure, personal hub for user data. This approach aims to differentiate Apple's AI services by leveraging the deep integration of personal information stored on its hardware.

Financial analysts have raised their price target for Apple stock to $360 from $340, citing the company's continued share gains in the PC and smartphone sectors. However, the rating remains cautious, reflecting the stock's high valuation and the ongoing nature of hardware component cost challenges.