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◆ Inside the Latest Quarter (Q4 FY2026)

Apple (AAPL) — the variant view

The best year in Apple's history ended with the gross margin guided down two and a half points — not by a regulator or a rival, but by the price of memory.

📈 AAPL valuation, revenue & earnings — P/E, P/S, revenue, EPS →

Apple finished the best fiscal year in its history and spent the call talking about the price of memory. The September quarter brought in $114.5 billion, up 12% and a September-quarter record, with net income of $30.7 billion and diluted earnings of $2.10, up 14%1. The full year came to $478.8 billion, up 15.1% — the fastest growth since 2021 — and earnings per share rose 20.4% to $8.982. On every measure an owner normally checks, this was an excellent year.

September-quarter net sales growth by line, year on year (%)+23.7%Mac+17.5%iPhone+9.8%Services-7.9%Wearables-10.4%iPadCalc from Apple results exhibits; red bars are declines, drawn as magnitudes
Three lines carried a record September quarter and two fell hard — and across the full year the iPhone grew faster than the Services meter attached to it for the first time in a decade.

Three things inside it matter more than the headline. The first is that the iPhone, which this app has spent years describing as the flat half of a company carried by Services, grew 21.2% for the year against Services' 13.0%, lifting its share of revenue from 50% to 53%3. For the first time in a decade the phone outgrew the meter attached to it. The second is that two of the five product lines went backwards: the iPad fell 0.3% for the year and 10.4% in the September quarter, and Wearables fell 0.3% and 7.9%, a fourth consecutive annual decline4. The third is Greater China, the perennial worry, which grew 28% to a record $82.4 billion and finally passed its fiscal 2022 peak5.

The margin is where the quarter turns. Gross margin printed 47.9%, and about a point of that was a refund of tariffs Apple had already paid; the company's own explanation is that the benefit was offset by higher memory costs6. Strip the refund out and the quarter sat near 47%. Research spending rose 32% for the year, to $45.8 billion, which Apple attributes to artificial intelligence7 — a cost the income statement now carries permanently.

Then the guidance, which is the real news. Apple expects December revenue to grow 7 to 10% and says it will be the largest revenue quarter in the company's history, but that the limit is constrained supply rather than demand8. It guided gross margin to 45-to-46%, about two and a half points below the year just reported, citing memory costs and the cost of ramping Siri AI9. John Ternus called what he is seeing in memory pricing unprecedented10. And Apple is answering with the balance sheet: manufacturing purchase obligations rose $33 billion between June and September to secure supply11, and inventories went from $5.7 billion to $14.5 billion in twelve months12, at a company that has treated lean inventory as a point of pride for thirty years. Buying a year of memory forward is not a hedge a confident purchaser needs to place.

There is an irony here that this collection happens to hold both ends of. Micron, SK hynix, Kioxia and Sandisk each have a page in this app arguing that the price of memory has transformed their economics. Apple is the buyer on the other side of that trade, and it is the one paying.

One quieter item, easy to miss. Apple returned $102.1 billion to shareholders over the year, $86.4 billion of it in buybacks — down from $90.7 billion, in a year when earnings rose 18%13. It paid out 77% of what it earned against 95% the year before, and retained earnings turned positive for the first time since the repurchases began outrunning profits14. Whether that is caution about the memory bill or capital waiting for something else, Apple did not say.

The number that settles this is the December gross margin. Apple has guided to 45-to-46% with no tariff refund left to flatter it. A print at the bottom of that range or below, on the largest revenue quarter the company has ever had, would mean the brand could not pass the memory bill on — and that the cushion this company's whole valuation rests upon is thinner than a decade of rising margins has made it look.

References
  1. ReportedSeptember-quarter revenue of $114,477M, up 12% and a September-quarter record, with net income of $30,711M and diluted EPS of $2.10, up 14%.
    Apple Inc., Form 8-K Exhibit 99.1 — Q4 FY2026 results: revenue $114,477M (+12%), net income $30,711M, diluted EPS $2.10; twelve months revenue $478,834M, net income $132,175M, diluted EPS $8.98; net sales by category iPhone $254,098M, Services $123,301M, Wearables/Home/Accessories $35,577M, Mac $37,929M, iPad $27,929M; by segment Americas $198,083M, Europe $127,604M, Greater China $82,378M, Japan $30,908M, Rest of Asia Pacific $39,861M; R&D $45,765M; inventories $14,541M vs $5,718M; intangibles $20,278M vs $11,093M; repurchases $86,390M; capex $9,041M; D&A $13,423M — Q4 and FY2026 (quarter and year ended 26 September 2026) · publ. 2 November 2026 · source ↗
  2. ReportedFY2026 revenue of $478,834M, up 15.1%, with diluted EPS of $8.98, up 20.4%.
    Apple Inc., Form 8-K Exhibit 99.1 — Q4 FY2026 results: revenue $114,477M (+12%), net income $30,711M, diluted EPS $2.10; twelve months revenue $478,834M, net income $132,175M, diluted EPS $8.98; net sales by category iPhone $254,098M, Services $123,301M, Wearables/Home/Accessories $35,577M, Mac $37,929M, iPad $27,929M; by segment Americas $198,083M, Europe $127,604M, Greater China $82,378M, Japan $30,908M, Rest of Asia Pacific $39,861M; R&D $45,765M; inventories $14,541M vs $5,718M; intangibles $20,278M vs $11,093M; repurchases $86,390M; capex $9,041M; D&A $13,423M — Q4 and FY2026 (quarter and year ended 26 September 2026) · publ. 2 November 2026 · source ↗
  3. Moat Explorer calcThe iPhone grew 21.2% in FY2026 against 13.0% for Services, lifting its share of revenue from 50% to 53%.
    Moat Explorer calculation from Apple's Q4 FY2026 results exhibit (growth rates, category and segment shares, products and Services gross margins, gross-profit shares and compound growth rates are all derived from the reported dollar figures) — FY2026 · publ. 3 November 2026 · source ↗
    Method: Shares and margins are the reported dollar lines divided into one another.
  4. Moat Explorer calcThe iPad fell 0.3% for FY2026 and 10.4% in the September quarter; Wearables fell 0.3% and 7.9%, a fourth consecutive annual decline.
    Moat Explorer calculation from Apple's Q4 FY2026 results exhibit (growth rates, category and segment shares, products and Services gross margins, gross-profit shares and compound growth rates are all derived from the reported dollar figures) — FY2026 · publ. 3 November 2026 · source ↗
    Method: Shares and margins are the reported dollar lines divided into one another.
  5. ReportedGreater China net sales of $82,378M in FY2026, up 28% and above the $74.2 billion of FY2022.
    Apple Inc., Form 8-K Exhibit 99.1 — Q4 FY2026 results: revenue $114,477M (+12%), net income $30,711M, diluted EPS $2.10; twelve months revenue $478,834M, net income $132,175M, diluted EPS $8.98; net sales by category iPhone $254,098M, Services $123,301M, Wearables/Home/Accessories $35,577M, Mac $37,929M, iPad $27,929M; by segment Americas $198,083M, Europe $127,604M, Greater China $82,378M, Japan $30,908M, Rest of Asia Pacific $39,861M; R&D $45,765M; inventories $14,541M vs $5,718M; intangibles $20,278M vs $11,093M; repurchases $86,390M; capex $9,041M; D&A $13,423M — Q4 and FY2026 (quarter and year ended 26 September 2026) · publ. 2 November 2026 · source ↗
  6. ReportedSeptember-quarter gross margin of 47.9%, including about a percentage point from tariff refunds, offset by higher memory costs.
    Apple Inc., Form 8-K Exhibit 99.1 — Q4 FY2026 results: revenue $114,477M (+12%), net income $30,711M, diluted EPS $2.10; twelve months revenue $478,834M, net income $132,175M, diluted EPS $8.98; net sales by category iPhone $254,098M, Services $123,301M, Wearables/Home/Accessories $35,577M, Mac $37,929M, iPad $27,929M; by segment Americas $198,083M, Europe $127,604M, Greater China $82,378M, Japan $30,908M, Rest of Asia Pacific $39,861M; R&D $45,765M; inventories $14,541M vs $5,718M; intangibles $20,278M vs $11,093M; repurchases $86,390M; capex $9,041M; D&A $13,423M — Q4 and FY2026 (quarter and year ended 26 September 2026) · publ. 2 November 2026 · source ↗
  7. ReportedResearch and development of $45,765M in FY2026, up 32%, which Apple attributes to investment in artificial intelligence.
    Apple Inc., Form 8-K Exhibit 99.1 — Q4 FY2026 results: revenue $114,477M (+12%), net income $30,711M, diluted EPS $2.10; twelve months revenue $478,834M, net income $132,175M, diluted EPS $8.98; net sales by category iPhone $254,098M, Services $123,301M, Wearables/Home/Accessories $35,577M, Mac $37,929M, iPad $27,929M; by segment Americas $198,083M, Europe $127,604M, Greater China $82,378M, Japan $30,908M, Rest of Asia Pacific $39,861M; R&D $45,765M; inventories $14,541M vs $5,718M; intangibles $20,278M vs $11,093M; repurchases $86,390M; capex $9,041M; D&A $13,423M — Q4 and FY2026 (quarter and year ended 26 September 2026) · publ. 2 November 2026 · source ↗
  8. ReportedDecember-quarter revenue guided to 7-10% growth and expected to be the best revenue quarter in the company's history, reflecting constrained supply.
    Apple Q4 FY2026 earnings call — Ternus: memory pricing "unprecedented"; Khan: manufacturing purchase obligations up $33 billion from the June to the September quarter, December constraints on Mac and iPad "primarily driven by memory"; Parekh: December revenue growth 7-10% and "the best quarter for revenue in the history of the company", Services growth 8-9% with "headwinds, primarily driven by third-party licensing and foreign exchange", gross margin 45-46% on higher memory costs and the Siri AI ramp, Siri AI cloud costs recognised through Services cost of sales; installed base over 2.5 billion active devices; paid subscriptions over 1.5 billion; Services gross margin 76.0%; App Store "performance was similar to the prior year" with "headwinds in mobile gaming" — Quarter ended 26 September 2026 · publ. 2 November 2026 · source ↗
  9. ReportedDecember-quarter gross margin guided to 45-46%, on higher memory costs and costs related to the ramp of Siri AI.
    Apple Q4 FY2026 earnings call — Ternus: memory pricing "unprecedented"; Khan: manufacturing purchase obligations up $33 billion from the June to the September quarter, December constraints on Mac and iPad "primarily driven by memory"; Parekh: December revenue growth 7-10% and "the best quarter for revenue in the history of the company", Services growth 8-9% with "headwinds, primarily driven by third-party licensing and foreign exchange", gross margin 45-46% on higher memory costs and the Siri AI ramp, Siri AI cloud costs recognised through Services cost of sales; installed base over 2.5 billion active devices; paid subscriptions over 1.5 billion; Services gross margin 76.0%; App Store "performance was similar to the prior year" with "headwinds in mobile gaming" — Quarter ended 26 September 2026 · publ. 2 November 2026 · source ↗
  10. ReportedJohn Ternus: "What we're seeing with memory pricing right now is unprecedented."
    Apple Q4 FY2026 earnings call — Ternus: memory pricing "unprecedented"; Khan: manufacturing purchase obligations up $33 billion from the June to the September quarter, December constraints on Mac and iPad "primarily driven by memory"; Parekh: December revenue growth 7-10% and "the best quarter for revenue in the history of the company", Services growth 8-9% with "headwinds, primarily driven by third-party licensing and foreign exchange", gross margin 45-46% on higher memory costs and the Siri AI ramp, Siri AI cloud costs recognised through Services cost of sales; installed base over 2.5 billion active devices; paid subscriptions over 1.5 billion; Services gross margin 76.0%; App Store "performance was similar to the prior year" with "headwinds in mobile gaming" — Quarter ended 26 September 2026 · publ. 2 November 2026 · source ↗
  11. ReportedManufacturing purchase obligations rose by $33 billion from the June to the September quarter to secure supply.
    Apple Q4 FY2026 earnings call — Ternus: memory pricing "unprecedented"; Khan: manufacturing purchase obligations up $33 billion from the June to the September quarter, December constraints on Mac and iPad "primarily driven by memory"; Parekh: December revenue growth 7-10% and "the best quarter for revenue in the history of the company", Services growth 8-9% with "headwinds, primarily driven by third-party licensing and foreign exchange", gross margin 45-46% on higher memory costs and the Siri AI ramp, Siri AI cloud costs recognised through Services cost of sales; installed base over 2.5 billion active devices; paid subscriptions over 1.5 billion; Services gross margin 76.0%; App Store "performance was similar to the prior year" with "headwinds in mobile gaming" — Quarter ended 26 September 2026 · publ. 2 November 2026 · source ↗
  12. ReportedInventories of $14,541M at 26 September 2026 against $5,718M a year earlier.
    Apple Inc., Form 8-K Exhibit 99.1 — Q4 FY2026 results: revenue $114,477M (+12%), net income $30,711M, diluted EPS $2.10; twelve months revenue $478,834M, net income $132,175M, diluted EPS $8.98; net sales by category iPhone $254,098M, Services $123,301M, Wearables/Home/Accessories $35,577M, Mac $37,929M, iPad $27,929M; by segment Americas $198,083M, Europe $127,604M, Greater China $82,378M, Japan $30,908M, Rest of Asia Pacific $39,861M; R&D $45,765M; inventories $14,541M vs $5,718M; intangibles $20,278M vs $11,093M; repurchases $86,390M; capex $9,041M; D&A $13,423M — Q4 and FY2026 (quarter and year ended 26 September 2026) · publ. 2 November 2026 · source ↗
  13. ReportedFY2026 repurchases of $86,390M against $90,711M, and dividends of $15,721M, against net income of $132,175M.
    Apple Inc., Form 8-K Exhibit 99.1 — Q4 FY2026 results: revenue $114,477M (+12%), net income $30,711M, diluted EPS $2.10; twelve months revenue $478,834M, net income $132,175M, diluted EPS $8.98; net sales by category iPhone $254,098M, Services $123,301M, Wearables/Home/Accessories $35,577M, Mac $37,929M, iPad $27,929M; by segment Americas $198,083M, Europe $127,604M, Greater China $82,378M, Japan $30,908M, Rest of Asia Pacific $39,861M; R&D $45,765M; inventories $14,541M vs $5,718M; intangibles $20,278M vs $11,093M; repurchases $86,390M; capex $9,041M; D&A $13,423M — Q4 and FY2026 (quarter and year ended 26 September 2026) · publ. 2 November 2026 · source ↗
  14. ReportedRetained earnings of $13,700M at 26 September 2026, against an accumulated deficit of $(14,264)M a year earlier.
    Apple Inc., Form 8-K Exhibit 99.1 — Q4 FY2026 results: revenue $114,477M (+12%), net income $30,711M, diluted EPS $2.10; twelve months revenue $478,834M, net income $132,175M, diluted EPS $8.98; net sales by category iPhone $254,098M, Services $123,301M, Wearables/Home/Accessories $35,577M, Mac $37,929M, iPad $27,929M; by segment Americas $198,083M, Europe $127,604M, Greater China $82,378M, Japan $30,908M, Rest of Asia Pacific $39,861M; R&D $45,765M; inventories $14,541M vs $5,718M; intangibles $20,278M vs $11,093M; repurchases $86,390M; capex $9,041M; D&A $13,423M — Q4 and FY2026 (quarter and year ended 26 September 2026) · publ. 2 November 2026 · source ↗
Sources
Generated November 3, 2026