Apple stock dips as service growth expectations cool
Despite strong initial demand for the $1,999 iPhone Duo, Apple shares declined following CEO John Ternus's warning of slowing service growth and tightening margins.
Apple CEO John Ternus reported a 12% revenue increase for the September quarter, narrowly beating Wall Street expectations. The growth was primarily driven by strategic price hikes rather than organic volume expansion. Following the announcement, Apple shares fell by as much as 4% as leadership adjusted future outlooks.
Ternus indicated that service sector growth is projected to decelerate, while gross margins are expected to face pressure from rising component costs, specifically in memory. These operational headwinds are compounded by ongoing regulatory scrutiny regarding App Store fees, a core revenue stream for the company.
Demand for the newly released $1,999 foldable iPhone Duo remains high, with shipping dates pushed into January. However, market analysts, including Oppenheimer’s Martin Yang, have raised concerns regarding the company's valuation. With the stock trading at a high earnings multiple, experts suggest limited upside potential as the firm navigates a shifting competitive landscape in AI and software.