Apple has released its earnings report—did all metrics beat expectations or decline? First, let’s look at the numbers. Apple reported its fiscal fourth quarter of 2026, which covers the period ending September 26—not the calendar year’s fourth quarter. Revenue for the quarter was $114.48 billion, up 12% year-over-year; net profit was $30.71 billion, up approximately 12%; diluted EPS came in at $2.10, up 14% year-over-year. Wall Street had expected revenue of around $113.4 billion and EPS of approximately $1.99—Apple exceeded both estimates. Full-year revenue reached $478.8 billion, up 15% year-over-year; net profit totaled $132.2 billion. On the surface, this earnings report looks outstanding. But experienced investors don’t just look at total revenue. First, the iPhone remains Apple’s largest cash cow. iPhone revenue this quarter was $57.58 billion, up approximately 17.5%. Mac revenue was $10.79 billion, up 23.7%. Services revenue hit $31.57 billion, up 9.8%, setting another record. However, iPad revenue was $6.23 billion, down 10.4% year-over-year; Wearables, Home, and Accessories revenue was $8.3 billion, down 7.9%. This reveals a key point: Apple’s growth isn’t driven uniformly across all segments—it’s primarily fueled by the iPhone, Mac, and Services. Especially Services, which carries a gross margin of around 76%. Hardware brings users into the ecosystem; Services generate ongoing profits. This is truly where Apple’s strength lies. Second, the biggest hidden risk in this report is rising memory prices. Apple’s gross margin this quarter was 47.9%—seemingly strong. But one easily overlooked detail: tariff refunds contributed approximately 1 percentage point to gross margin and added $0.05 to EPS. In other words, excluding this one-time benefit, the underlying operating margin requires closer scrutiny. More troublingly, AI data centers are aggressively consuming memory capacity, driving up storage chip prices—and smartphone manufacturers are beginning to feel the cost pressure. Although Apple has strong supply chain bargaining power, it cannot remain entirely insulated. Management provided a gross margin guidance of only 45%–46% for the next quarter, a clear decline from this quarter’s 47.9%. This is what truly unsettles the market. Third, AI may be key to Apple’s next growth phase—but it hasn’t fully materialized yet. Microsoft, Google, and Meta are pouring massive resources into AI infrastructure. Apple’s approach is different: it aims to integrate AI directly into the iPhone, Mac, and its entire ecosystem. This strategy has advantages—it avoids the heavy capital expenditures required by other tech firms. But the reality is stark: Will AI drive users to upgrade their phones? Will it convince them to pay premium prices for higher-end hardware? If AI merely adds a few new features without significantly extending upgrade cycles or boosting services revenue, Wall Street won’t keep betting on the AI narrative indefinitely. Finally, why did the stock drop despite beating earnings expectations? I believe the core reason is that the market is now pricing in next quarter—not the just-ended one. Apple expects revenue growth of 7%–10% for the December quarter, with Services growth at 8%–9%, and gross margin likely falling to 45%–46%. Combined with rising memory costs, increased AI server investments, and constrained supply of some new products, investors are naturally reassessing profit potential over the coming quarters. There’s another noteworthy change: This is the first earnings report under new CEO John Ternus. Apple is currently in a transitional phase between cycles. Apple’s greatest remaining advantage is still its vast base of active devices, strong brand premium, and robust services ecosystem. But its challenges are equally clear: Can hardware growth continue? Can AI create new upgrade demand? And will rising memory costs erode profitability? A great company doesn’t mean any price is justified. This report proves Apple remains highly profitable—but it hasn’t yet demonstrated that it has found a second growth curve for the AI era. Next quarter, watch two metrics closely: the impact of memory prices on gross margin, and actual iPhone sales performance in the December quarter. These two indicators matter more than simply tracking record-breaking revenue figures.