Apple's Stock Slides on Weak Margin Outlook and Slowing Services Growth Under New CEO Ternus

Apple shares fell sharply after the company's first earnings report under new Chief Executive Officer John Ternus, as disappointing gross-margin guidance for the December quarter and a marked slowdown in services revenue growth overshadowed an otherwise upbeat sales forecast, according to Bloomberg and CNBC.

Margin Guidance Rattles the Call

Ternus' debut earnings call as CEO was proceeding smoothly, CNBC reported, until the company turned to forecasting gross margin, one of the metrics investors watch most closely. Apple's Chief Financial Officer, Kevan Parekh, told analysts on the call that the weaker guidance reflected "primarily the impact of higher memory costs, as well as some costs related to the ramp of Siri AI," according to CNBC. Parekh also said that once refunds are removed, higher memory costs should account for most of the fall to the midpoint of the guidance, according to 247wallst.com.

Ternus himself used blunt language to describe the pressure. "What we're seeing with memory pricing right now is unprecedented," he said on the call, as reported by both CNBC and 247wallst.com, and warned that memory component pricing would keep climbing beyond the holiday quarter. Apple also said it expects supply constraints on iPhones and Macs during the December quarter, primarily driven by the memory shortage, according to CNBC.

Underscoring the scramble for components, Apple's manufacturing purchase obligations rose by $33 billion from the June quarter to the September quarter, CNBC reported, a sign the company is locking in supply commitments as chip costs climb.

Services Growth Decelerates

Adding to investor unease, Apple's services business grew at its slowest pace since September 2022. Revenue in the segment came in at $31.57 billion, just below the Street's forecast of $31.58 billion, with growth of less than 10% during the quarter, according to SiliconANGLE. Fortune reported that investors sold the stock down after hours specifically because of Apple's outlook on margins, which the company indicated would continue to be squeezed by both the memory chip shortage and slowing services growth, as described by Fortune.

How the Stock Reacted

The selloff unfolded in stages. Apple shares were already down about 1.83% in the regular session ahead of the results, according to Fortune and 247wallst.com, a decline 247wallst.com valued at roughly $92 billion in market value. After the earnings call, the stock extended its losses in after-hours trading, falling from a $338.32 close to $329.03, a drop of 2.75%, before the after-hours session ultimately closed at $328.81, down 2.81%, for a paper loss of nearly $139 billion, according to 247wallst.com. At its after-hours low of $323.33, down 4.43% from the close, the paper loss had briefly widened to roughly $219 billion before buyers recovered some of the decline, the outlet reported. The following morning, Apple shares slid a further 4% in premarket trading, CNBC reported.

Despite the drop, Apple's market capitalization closed at $4.94 trillion, ahead of Nvidia's $4.88 trillion, according to 247wallst.com.

Analyst Views on Valuation

The earnings reaction has sharpened debate among analysts over Apple's valuation. Oppenheimer analyst Martin Yang said the company trades at about 36 times next year's expected earnings, a premium to the broader technology market even though Apple's earnings are projected to grow only 1% this year, slower than many peers, according to SiliconANGLE. Separately, Apple investor Gene Munster told Fortune that heading into the holiday shopping period there is "more downside than upside," and flagged personalized AI agents as what he called "the biggest risk to the Apple ecosystem."

Taken together, these attributed views suggest some market participants see the stock's valuation as stretched relative to its near-term earnings growth, particularly with memory costs expected to persist. That is an interpretation offered by the cited analysts and investor, not a forecast from Apple itself, and should be read as one perspective among several rather than a prediction of future price moves.

Even with the post-earnings decline, Apple's shares remain up more than 24% year to date, compared with a gain of just over 10% for the broader S&P 500 index, according to SiliconANGLE, indicating the stock has still meaningfully outperformed the broader market in 2026 despite the sharp one-day reaction.

Bottom Line

Apple's first earnings report under CEO John Ternus delivered a split message: sales guidance that struck an upbeat tone, paired with margin pressure from what Ternus called "unprecedented" memory pricing and a services segment growing at its slowest pace in roughly four years. CFO Kevan Parekh pinned most of the margin shortfall on memory costs and the Siri AI ramp, while the company's rising manufacturing purchase obligations point to a company actively working to secure constrained components. The market's swift reaction, wiping out roughly $139 billion in after-hours value before a partial recovery, reflects investor sensitivity to margin trends even as Apple's shares remain comfortably ahead of the broader market for the year.