Apple's inventory jumps 154% in a year as memory costs surge

Margins and pricing

Apple reported a gross margin of 47.9% for the quarter ended in September. For the December quarter, it expects the figure to land between 45% and 46%.

Ternus said the impact of higher memory costs will be partly offset by price increases made during the year: Mac and iPad prices went up at the end of June, and iPhone prices followed in September. The company expects its advantage in memory purchasing to fade over time. Manufacturing purchase obligations rose by $33 billion between June and September.

Cash flow and segments

The larger inventory weighed on cash flow. Inventory changes used $8.9 billion in cash in fiscal 2026, compared with $1.4 billion provided a year earlier. Even so, annual operating cash flow climbed from $111.48 billion to $145.1 billion.

Supply constraints hit the iPad, whose revenue fell 10% year over year to $6.2 billion. Total revenue reached $114.48 billion and net income $30.71 billion. iPhone, Mac and Services revenue grew, while the wearables category declined.

For buyers, the message is that component costs are feeding directly into device pricing. With Apple guiding to lower margins and still-rising memory costs in the next quarter, further pressure on hardware pricing remains a live question.