Apple warns of sales slowdown as AI drives up prices
Apple warns of sales slowdown as AI drives up prices
Joe SledgeTue, November 3, 2026 at 1:20 AM UTC
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John Ternus, Apple’s chief executive, warned that pressures from the rising cost of memory chips were only intensifying - Evelyn Hockstein
Apple has warned of a sales slowdown as artificial intelligence (AI) drives up the cost of its iPads and laptops.
The US tech giant forecast sales growth of 7pc to 10pc for the crucial Christmas quarter, compared to growth of 12pc in the three months to Sept 26.
The slowdown comes as a global scramble to build AI data centres and other infrastructure drives up the cost of the semiconductors Apple relies on.
Estimates indicate that memory and storage costs for the iPhone 18 Pro have surged to nearly $200 (£160) per device, up from approximately $52 in the previous generation.
Apple raised its laptop and iPad prices by up to 25pc over summer in response to the rapidly rising component costs.
John Ternus, Apple’s chief executive, warned that pressures from the rising cost of memory chips were only intensifying.
On his first earnings call since taking over from Tim Cook in September, Mr Ternus described the situation as “unprecedented”, telling analysts that the company expected to confront even higher costs in the months ahead.
Rising semiconductor prices are also squeezing the company’s profit margins. Apple forecast a gross margin of 45 per cent to 46 per cent in the coming quarter, compared to 47.9 per cent in the period just ended.
Mr Ternus said that “costs with manufacturers have significantly risen as well”.
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Shares slumped
Shares slumped as much as 4 per cent in after-hours trading on Monday following the update.
The downbeat sales and profit margin forecasts took the shine off what was an otherwise strong quarter for Apple.
The tech giant reported quarterly revenue of $114.5bn, beating Wall Street’s expectations of $113.4bn.
iPhone revenue came in at $57.6bn, compared with projections of $56.5bn. Net profit was $30.7bn, which also beat forecasts.
The quarter included nine days of sales for the new iPhone 18 Pro lineup but excluded revenue from the $1,999 foldable iPhone Duo, which launched on Oct 23.
The new device has faced an early setback after some customers reported cracks and line defects forming along the inner display’s centre fold.
Customers reported cracks and line defects on the foldable iPhone Duo - X/Justin Lokos
Performance in the most recent quarter was helped by tariff refunds after the US Supreme Court ruled Donald Trump’s sweeping trade restrictions unlawful. Apple said the refunds added around 1 percentage point to its profit margin.
Apple recently reclaimed the position of world’s most valuable company, worth more than $5tn, after Nvidia lost the title during a tech sell-off. The slump was driven by fears of AI overspending, which has rattled Wall Street in recent days.
Until now, Apple has largely benefited as it is seen as less exposed to the AI industry than other big tech companies.
Source: “AOL Money”
