Nomura: Behind Apple’s revenue growth, memory costs weigh on supply-chain shipments

Where was Apple’s earnings report strong, and where was it weak?

Apple’s revenue for the fiscal fourth quarter ended in September 2026 was 114.5 billion dollars, up 11.7% year over year and above the Bloomberg consensus forecast of 113.3 billion dollars. Earnings per share were 2.11 dollars, also above the 2.00 dollars expected.
iPhone and Mac revenue rose 17% and 24% year over year, respectively, while services revenue grew 10%. But iPad revenue fell 10%, and revenue from wearables, home and accessories declined 8%. Greater China revenue grew 21% year over year but remained below consensus expectations.
Apple expects total revenue to grow 7% to 10% year over year in the December quarter, and services revenue to grow 8% to 9%. Nomura believes iPhone and Mac revenue growth came mainly from price increases and a shift toward higher-end products, and did not necessarily coincide with shipment growth.

Overall gross margin in the September quarter was 47.9%, down 2.2 percentage points from the previous quarter. Product gross margin fell to 37.2%, down 2.9 percentage points sequentially, which management attributed mainly to higher memory costs. Services gross margin rose 0.3 percentage points sequentially to 76%.
Apple guided for gross margin of 45% to 46% in the December quarter, expecting memory costs to rise further and the buffer from inventory carryover to weaken. By Nomura’s calculation, even after excluding the benefit of tariff refunds in the September quarter, the midpoint of the guidance still implies a sequential gross-margin decline of 1.4 percentage points.
Passing costs through to selling prices could also depress sales. IDC data show that after Apple raised prices in mid-2026, Mac shipments fell 11.3% year over year in the September quarter. Nomura expects price sensitivity to affect iPhone sales in the December quarter as well, following price increases in September.

Nomura cut its calendar-year 2026 iPhone production forecast from 260 million units to 254.4 million units, still up 5.6% year over year. Its initial forecast for 2027 is 250 million units, down 1.7% year over year.
The bank expects iPhone production to fall 13.5% year over year in the first half of 2027: some high-end models were produced ahead of schedule in the second half of 2026, while high costs have made production of lower-end models more cautious. If preparations for new models proceed smoothly, production could rise 7.5% year over year in the second half.
For MacBooks, Nomura cut its 2026 production forecast from 30 million units to 25.5 million units and expects production to be flat in 2027. It lowered its 2026 iPad forecast from 44 million units to 40 million units and expects a further decline in 2027.
Nomura expects Apple suppliers’ revenue from Apple to decline by double digits year over year across the board in the first half of 2027. Reasons include a high base created by advance stockpiling in the prior-year period, moderate demand for new high-end iPhones, and demand concerns amid rising memory costs.

Apple plans to ease the pressure by reducing the cost of some non-memory components. Nomura believes the suppliers it covers will be only modestly affected by price reductions: some companies have shifted resources to new businesses such as AI and are less willing to increase their Apple-related investment further, improving their bargaining power.
Nomura is more positive on suppliers that have expanded into AI or new businesses, or may benefit from high-end iPhone specification upgrades in the second half of 2027. For example, the bank expects AI optical module board businesses to contribute to ZDT and Compeq, while tight supply of AI-related PCBs and copper-clad laminates also supports the two companies’ bargaining power in PCB pricing.
A second-half production recovery depends on progress with new models. Nomura expects Apple is preparing several high-end and foldable models, but also points to cost, production and yield challenges associated with the anniversary model’s new architecture. It remains difficult to tell whether all models being prepared will launch in 2027.