Apple posts stronger-than-expected revenue in first earnings report for new CEO John Ternus
Source Entity
Associated Press
Apple's new CEO John Ternus faces supply challenges with the sold-out iPhone Duo amid rising memory costs. Despite record Q4 2026 revenue, the company warns of margin pressure due to high demand for AI-related hardware.
Apple’s New Leadership Faces Early Hurdles
Apple has entered a transformative era under new CEO John Ternus, who assumed the role from Tim Cook in September 2026. His first earnings report reflects a company at a crossroads: while the firm posted a robust $114.5 billion in revenue for Q4 2026, the transition is marked by significant operational volatility. The launch of the $1,999 iPhone Duo has served as a litmus test for the company’s ability to pivot into the foldable market, yet the device’s immediate sell-out has created a public relations and supply chain dilemma.
The iPhone Duo: Success and Hardware Challenges
The iPhone Duo has proven to be a high-demand luxury product, capturing consumer interest despite its steep price point. However, the product’s rollout has not been without friction. Reports of screen cracking have emerged among early adopters, casting a shadow over the device's technical reliability. COO Sabhi Kahn has acknowledged the difficulty in balancing supply and demand, leaving consumers in the dark regarding when additional units will become available.
The 'RAMageddon' Effect on Profitability
Beyond product-specific issues, Apple is grappling with a broader industry phenomenon dubbed "RAMageddon." The surge in demand for memory chips, driven primarily by the needs of AI datacenters, has created an unprecedented rise in costs. Ternus noted that these rising memory expenses are the primary drag on Apple’s gross margins, which are expected to dip to 45–46 percent in the upcoming holiday quarter. This competition for components has forced Apple to engage in a difficult battle for supply against other major tech players.
Strategic Pricing and Revenue Resilience
Despite these headwinds, Apple’s underlying financial health remains strong. The company achieved record-breaking iPhone sales in the September quarter—achieved even without the release of a standard iPhone 18—and saw its Mac division experience its best year to date. To mitigate the impact of rising component costs, the company has already implemented price increases across its iPad, MacBook, and iPhone lineups earlier in the year, which Ternus credited with providing a necessary financial offset.
Future Outlook: AI and Market Expansion
As Apple moves forward, the integration of AI into its ecosystem continues to be a double-edged sword. While services have set revenue records, the company has signaled that growth in this area may cool and that usage limits for Siri AI are imminent due to the high operational costs of running such advanced models. Simultaneously, the Indian market continues to serve as a bright spot, consistently setting growth records for the company. The coming quarters will be critical for Ternus as he balances high-end innovation with the harsh realities of global hardware supply constraints.
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