Apple's Ternus Faces First Earnings Call Today as Memory Costs Weigh on Profit Estimates

John Ternus, who replaced Tim Cook as Apple's CEO in September, hosts his first earnings call today, Nov. 2. Apple's results for the July-September quarter are due Monday evening in Europe. The numbers have not been released yet. Everything below is an expectation, not a result.

What Wall Street expects

Analysts surveyed by LSEG expect revenue of $113.39 billion, up nearly 11%. They expect net profit of $29.04 billion, up about 6%.

That profit growth would be the weakest in six quarters. Revenue is growing nearly twice as fast as profit.

iPhone revenue is forecast to rise about 15% to $56.54 billion, down from growth of about 22% in the previous three months. Services are projected to grow almost 10% to $31.56 billion, the slowest pace in more than three years.

The quarter captures only nine days of iPhone 18 Pro sales. The iPhone Duo, Apple's first foldable, went on sale Oct. 23, so none of its revenue lands in these results.

The memory problem

Cook warned in June that Apple could no longer absorb rising memory costs and would have to raise some product prices. He had described the surge as a "100-year flood."

TechInsights estimated at the time that memory and storage components in the iPhone 18 Pro could cost Apple about $196, up from roughly $52 in the iPhone 17 Pro. That is a roughly fourfold jump on a single component category.

Whether more price increases are coming is one of the questions investors want answered. Apple has not said.

A busy launch, a shaky start for the Duo

Ternus has overseen the debut of Apple's first foldable phone, a smart home hub and its first touch-screen laptops. All began shipping in the current fiscal first quarter.

The Duo starts at $1,999 in the U.S. Some buyers have reported cracks and lines along the inner display's central fold, and Apple has offered replacements. Investors will want to know how the phone is selling and how many units are affected.

AJ Bell analysts Russ Mould, Danni Hewson and Dan Coatsworth said the quarter itself matters less than what comes next. "With only nine days of iPhone 18 Pro sales and no iPhone Duo revenue in the quarter, the market reaction is likely to be driven by Christmas guidance," they said.

AI: restraint has paid so far

Apple's shares are up about 27% this year. They have outperformed Microsoft, Alphabet, Meta and Amazon as investors look for shelter from concerns over the cost of building AI infrastructure. Apple's relatively restrained AI spending has helped.

The strategy has critics. Dan Morgan, a portfolio manager at Synovus Trust, which owns Apple shares, said: "Recent agentic innovation far outpaces our experience with Siri AI, but Apple has acknowledged that Siri AI ... is far more focused on trust/privacy."

Meta's Muse agent has climbed App Store rankings in recent weeks. OpenAI, which Apple is suing over alleged trade-secret theft, is among the companies developing devices meant to displace the iPhone as people's central device.

Apple is pitching its AI to "everyday people" rather than Silicon Valley insiders who heavily use frontier models from the likes of OpenAI. Morgan said investors want to know whether Apple could profit by distributing third-party AI agents through the App Store and taking a cut of the business they generate.

The answer bears on services, Apple's high-margin business, where slowing growth has worried investors after years of rapid expansion.

What Ternus has to deliver

AJ Bell's analysts put it this way: "It's trick or treat time for new CEO John Ternus who has an opportunity to put his stamp on Apple's AI strategy and future direction."

He has three things to address on the call: a holiday-quarter forecast that has to absorb higher memory costs, a clearer account of the AI and Siri plan, and the first public read on Duo demand. The first Duo sales figures and any pricing decision will show up in the Christmas-quarter guidance. Apple has not disclosed either.