Apple’s earnings report was indeed mixed, as anticipated in our recent preview: revenue and EPS exceeded expectations, but growth in the China region and services business slowed. More critically, management proactively disclosed forward-looking guidance during the earnings call—high memory costs are expected to intensify over the coming quarters, further pressuring gross margins. CFO Kevan Parekh explicitly stated during the earnings call that memory costs were the primary driver of margin pressure this quarter, and the impact of elevated memory costs will be even more significant next quarter. While Apple previously stocked up on lower-priced components, this inventory is rapidly depleting, forcing the company to procure memory at higher prices going forward. Apple’s gross margin guidance for the December quarter is set between 45% and 46%. The company emphasized that this range “primarily reflects the impact of higher memory costs and certain expenses related to the launch of Siri AI.” This guidance represents a substantial decline of nearly 2 to 3 percentage points from the actual 47.9% gross margin this quarter and is well below prior market expectations, directly triggering an accelerated drop in stock price following the earnings call.