Apple Inventory Soars 154.3% as Memory Costs Squeeze Margins
Apple inventory jumped 154.3% year over year to $14.54 billion as soaring memory costs squeezed margins and raised the prospect of more device price hikes.
Summary
Apple’s fiscal fourth quarter results, reported November 2, 2026, showed inventory driven by computer memory stockpiling reached $14.54 billion, up 31.1% from $11.09 billion in Q3 and 154.3% from $5.72 billion in Q4 2025. Apple forecasts a 45% to 46% gross margin for the December quarter, below September’s 47.9%. CEO John Ternus called memory pricing unprecedented, said September costs exceeded June’s and expects further increases in December and beyond. Existing inventory and cheaper non-memory components provided partial relief, but the inventory benefit will diminish. Mac and iPad price increases at the end of June and iPhone increases in September will partly offset higher costs.
Apple is increasing memory purchases, while manufacturing purchase obligations rose by $33 billion from June to September, with details due in its November 3 annual filing. COO Sabih Khan reiterated the increase and left further device price rises possible. Supply constraints contributed to iPad revenue falling 10% from a year earlier to $6.2 billion, below analysts’ $6.7 billion estimate. The iPad was among Apple’s only segments without growth, while iPhone and Mac sales beat expectations.
Positives
- $14.54 billion in inventory gives Apple a larger buffer against escalating memory prices and supply constraints.
- Existing lower cost inventory and cheaper non-memory components partly offset September’s higher memory costs.
- Mac, iPad and iPhone price increases are expected to absorb some component cost pressure.
- iPhone and Mac sales exceeded analysts’ estimates despite memory inflation and supply challenges.
- Apple is increasing memory purchases as it works to improve component availability.
Risks & concerns
- Inventory rose 154.3% from $5.72 billion to $14.54 billion in one year, tying up substantially more capital.
- Apple expects December gross margin of 45% to 46%, down from 47.9% in September, largely because of memory costs.
- John Ternus expects memory costs to keep rising beyond December as Apple’s lower cost inventory benefit fades.
- Manufacturing purchase obligations increased by $33 billion from June to September as Apple sought more supply.
- Sabih Khan did not rule out further Apple device price increases.
- iPad revenue fell 10% to $6.2 billion, missing analysts’ $6.7 billion estimate because of supply constraints.