Apple Is Dealing With New Problems Now
Apple (AAPL) stock is priced at 37.9 times earnings, against 21.5 for the S&P 500. Shareholders paying that much need to know what they are buying, and therein lies the twist: management has changed the problem it leads with. In fiscal 2025, management led with tariffs and the countries where Apple builds its iPhones. Now it leads with something else. So what are the problems now?
Apple Has Two Problems Now: Chips And Memory
Apple cannot get enough of its own processors, and it is paying much more for memory. Management put both at the front of its fiscal Q3 2026 call on July 30, 2026, when it reported the June quarter. It said the shortage shows up mainly at the advanced chip production lines where Apple’s processors are made. On memory, it described prices rising so fast that it raised its own prices, reluctantly.
The calls sounded different in 2025. On the fiscal Q2 2025 call, management said the “majority of iPhones sold in the U.S. will have India as their country of origin”. A quarter later, on the fiscal Q3 2025 call, it explained how the tariff situation was changing.
Tariffs earned that attention. The iPhone brought in 50% of Apple’s revenue in fiscal 2025, so a tariff on phones reached deep into the company. Investors felt it too: Apple stock fell 30% in the tariff shock from February to June 2025, against 19% for the S&P 500.
What Are Chips And Memory Costing Apple?
The chip shortage is costing Apple sales growth. Revenue grew 16% from a year earlier in the June quarter, and management guided to growth of 9% to 11% for the September quarter. Management said the shortage would get much worse that quarter and would reach the iPhone, Mac and iPad. It said the shortage and currency swings together explain nearly all of the slowdown.
The iPhone shows the same pattern. Its revenue grew 22% in the June quarter, and management guided to growth in the mid-teens for the September quarter.
Memory is costing Apple margin. Gross margin was 50.1% in the June quarter, and management guided to 47% to 48% for the September quarter, when it expected to pay even higher memory costs.
Tariffs, the old problem, are now adding to Apple’s margin through refunds. Tariff refunds added about two percentage points to gross margin in the June quarter, and management guided to about one point from them in September. On that guidance, the help from refunds shrinks while the memory bill grows.
Which Of Apple’s Two Problems Matters More?
The memory bill looks like the more concerning of the two. Management said the chip shortage comes from demand: the iPhone and the Mac are selling far better than it had forecast. That reads as a better problem to have than rising costs, or than the tariffs Apple was explaining in 2025.
Management said it sees memory prices continuing to rise beyond September, but it gave no guidance for any quarter past September.
Apple will show its margin when it reports its September quarter. A gross margin below 47%, the low end of management’s forecast, would suggest memory costs rose faster than Apple planned for, or that tariff refunds helped less than the one point management expected.
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