Apple shares declined approximately 4% on Tuesday, November 3, 2026, following the company's first quarterly earnings report under new CEO John Ternus. The decline, which represents a potential market value loss of over $170 billion, was driven by company disclosures that rising memory chip costs are reducing profit margins. The stock drop also weighed on the broader S&P 500 and Nasdaq indices.
The report comes during a period of increased demand for memory chips driven by the artificial intelligence industry's data-center expansion, which has reduced available supply. The trend has already affected sales of personal computers and smartphones across the electronics sector earlier this year. Last week, Intel also issued a forecast indicating declining demand for PC chips.
Apple's gross margin fell to 47.9% in the September quarter, down from the June quarter. Ternus stated on his first earnings call that memory pricing is "unprecedented" and projected costs will increase further through the December quarter and beyond. To manage these costs, Apple has utilized older inventory purchased at lower prices and increased its manufacturing purchase obligations by $33 billion to a total of $89.7 billion as of September 26.
For consumers, these supply chain pressures may translate into higher retail prices. Apple has already raised prices to protect its profitability, and Dan Coatsworth of AJ Bell noted that further increases are not ideal at a time when consumers are "feeling the pinch" from a higher cost of living. This comes as the company continues a product blitz that includes the rollout of new hardware such as the iPhone 18 Pro lineup, the iPhone Duo foldable phone, and touchscreen MacBooks.
Beyond individual purchases, Apple's financial performance sets a precedent for the broader technology sector. The company is currently grappling with the costs of rolling out an AI-powered Siri, showing that even firms with high supply-chain expertise are not immune to the AI industry's competition for hardware components. What happens next depends on the holiday shopping season; the company has projected upbeat revenue based on premium iPhone demand, but it must manage the shrinking margins Ternus forecast for the quarter ending in December. The stock currently trades at nearly 35 times its expected earnings over the next 12 months.