Apple posts record $114.5B quarter as iPhone Duo shortages and memory costs bite

Apple closed fiscal 2026 with the strongest September quarter in its history. The company reported revenue of $114.5 billion for the three months ended September 26, up 12 percent year over year, with records for total revenue, iPhone revenue and earnings per share, according to Apple's announcement. Services revenue also reached an all-time high.

Diluted earnings per share was $2.10, up 14 percent. Both results were helped by tariff refunds, which Apple said added roughly one percentage point to its 47.9 percent gross margin and $0.05 to EPS.

A record quarter caps a record year

CEO John Ternus described the result as the capstone of Apple's best fiscal year ever, with full-year revenue of $479 billion. CFO Kevan Parekh said the quarter also set a September-quarter record for net income, and that Apple's installed base of active devices reached an all-time high across every major product category and geographic segment.

Apple generated $28 billion in operating cash flow during the quarter and returned the same amount to shareholders. The board declared a dividend of $0.27 per share, payable November 16 to shareholders of record on November 12.

According to The Verge, iPhone revenue came in at $57.58 billion, a September-quarter record set without a standard iPhone 18 in the lineup. This cycle Apple is selling only the iPhone 18 Pro, the iPhone 18 Pro Max and the iPhone Duo, its first foldable, which Ternus called the most transformational iPhone since the original.

iPhone Duo demand outruns supply

The Duo went on sale in October at $1,999 with a 5.4-inch outer display and a 7.6-inch inner screen, The Verge reports. Preorders sold out within hours, Apple told the Financial Times in an October report that demand was "nothing short of extraordinary," and some orders are now expected to arrive in 2027.

On the earnings call, Chief Operating Officer Sabih Khan said the device is constrained and that the production ramp is going well, but that it is "really hard to predict when supply and demand will be in balance." Ternus gave a similar answer in an interview with Reuters, telling the outlet Apple is "not able to predict" when the two will balance.

The shortages are already visible to customers. TechCrunch reports that buyers who did not preorder or line up at an Apple Store are seeing ship times stretch into next year, and that Verizon has been offering gift cards to apologize for the delays. Apple is also deepening its partnership with titanium producer Perryman to secure materials for the foldable, according to TechCrunch. Separately, Ternus told Reuters that a "very small percentage" of Duo units have been returned over cracked screens and that Apple is replacing them.

Memory costs cloud the December quarter

The other theme of the call was memory pricing. Soaring demand for memory chips from the AI industry has raised component costs for hardware makers across the board, TechCrunch notes, and Apple has already responded with price increases across its lineup, a step Khan said the company took "reluctantly." Those increases included higher starting prices for the iPhone 18 Pro and Pro Max, according to The Verge.

"What we're seeing with memory pricing right now is unprecedented," Ternus said on the call, adding that Apple expects even higher memory costs in the December quarter. He said those costs will be partly offset by the recent price increases.

Why it matters

Apple just posted its best fiscal year ever, yet the outlook hinges on two forces largely outside its control: a flagship device it cannot build fast enough and memory prices inflated by AI industry demand. The memory squeeze matters well beyond Cupertino, because if component costs keep climbing, higher device prices are likely to spread across the industry rather than stay confined to Apple's catalog. The Duo shortage, meanwhile, lands in the middle of the holiday shopping season, pushes revenue from some buyers into 2027, and tests a supply chain that TechCrunch notes is famous for its efficiency. The cushion is the installed base: record active devices underpin the Services business that just hit an all-time high, giving Apple room to absorb the disruption while it works through the constraints.