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Apple Falls Despite Earnings Beat: Buy the Dip With ETFs?
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Apple (AAPL - Free Report) delivered better-than-expected fourth-quarter fiscal 2026 results, supported by strong iPhone and Mac sales. However, weakness in Greater China and rising memory costs remain key concerns. Shares fell 2.6% after hours, reflecting the earnings results.
The company reported earnings per share (EPS) of $2.10 on revenues of $114.48 billion, topping the Zacks Consensus Estimate of $1.98 and $112.95 billion, respectively. In the year-ago quarter, Apple reported EPS of $1.85 and revenues of $102.46 billion.
iPhone and Mac Lead Revenue Growth
iPhone revenues totaled $57.58 billion, beating the $56.48 billion analyst estimate. Mac revenues also performed well at $10.79 billion, comfortably ahead of the $9.69 billion projection, as mentioned on Yahoo Finance.
Services, Apple's second-largest business, generated $31.57 billion, virtually matching expectations of $31.58 billion. Wearables and iPad contributed $8.3 billion and $6.23 billion, respectively.
Greater China revenues came in at $17.54 billion, missing the $18.75 billion estimate. However, sales in the region increased 28% year over year, helped by strong demand for iPhone and Mac.
Memory Costs and Supply Constraints Pose Challenges
Apple warned that Mac and iPad supplies could remain tight in the December quarter as demand exceeds expectations. Limited availability of advanced processing nodes has also affected the supply of iPhone, Mac and iPad.
Chief operating officer Sabih Khan noted that Apple increased its purchase obligations by $33 billion between the June and September quarters to strengthen memory supplies. Chief executive officer Ternus described the current surge in memory prices as "unprecedented," due to the massive expansion of AI infrastructure.
Apple faced higher memory costs in the September quarter and expects further increases in the December quarter. The company expects these pressures to continue beyond December, with inventory benefits gradually fading.
December Quarter Outlook
Apple chief financial officer Kevan Parekh expects December-quarter revenues to increase 7-10% year over year, potentially making it the company's best quarter ever. The Zacks Consensus Estimate for December quarter sales growth was 5.73%, before the earnings release.
The company expects Services revenue growth of 8-9%, while gross margin is projected at 45-46%, reflecting higher memory costs. Operating expenses are forecast between $20.4 billion and $20.8 billion.
Inside AI Initiatives, Cash Position and Tariff Benefits
Ternus said AI agents offer opportunities but stressed that Apple wants to ensure that users understand the access they grant to these tools. He emphasized that security and privacy would remain priorities.
Apple ended the quarter with $137 billion in cash and marketable securities against total debt of $80 billion. Meanwhile, its Wearables and iPad installed bases reached new record highs.
Parekh also noted that tariff refunds helped support margins. Without these refunds, Apple's overall and product gross margins would have been about 1 percentage point lower sequentially.
Why Buy Apple Shares With ETFs?
Against this backdrop, investors can play Apple through a diversified ETF approach to minimize company-specific concentration risks. This approach allows investors to benefit from any sudden weakness in Apple shares caused by memory pricing, a potential decline in margins and any weakness in China sales.
Meanwhile, investors can buy the dip in Apple shares with ETFs to play the company’s recent earnings beat, a solid holiday quarter outlook, upbeat cash position compared with other Big Tech peers, and gradual-but-steady AI initiatives. With the AI trade currently faltering, Apple’s limited AI exposure can prove to be a boon at the current level.
ETFs in Focus
Global X PureCap MSCI Information Technology ETF (GXPT - Free Report) – Apple weight 18.20%
Fidelity MSCI Information Technology Index ETF (FTEC - Free Report) – Apple weight 15.4%
iShares Top 20 U.S. Stocks ETF (TOPT - Free Report) – Apple weight 14.0%
View the Zacks #1 Rank List
Image: Bigstock
Apple Falls Despite Earnings Beat: Buy the Dip With ETFs?
Apple (AAPL - Free Report) delivered better-than-expected fourth-quarter fiscal 2026 results, supported by strong iPhone and Mac sales. However, weakness in Greater China and rising memory costs remain key concerns. Shares fell 2.6% after hours, reflecting the earnings results.
The company reported earnings per share (EPS) of $2.10 on revenues of $114.48 billion, topping the Zacks Consensus Estimate of $1.98 and $112.95 billion, respectively. In the year-ago quarter, Apple reported EPS of $1.85 and revenues of $102.46 billion.
iPhone and Mac Lead Revenue Growth
iPhone revenues totaled $57.58 billion, beating the $56.48 billion analyst estimate. Mac revenues also performed well at $10.79 billion, comfortably ahead of the $9.69 billion projection, as mentioned on Yahoo Finance.
Services, Apple's second-largest business, generated $31.57 billion, virtually matching expectations of $31.58 billion. Wearables and iPad contributed $8.3 billion and $6.23 billion, respectively.
Greater China revenues came in at $17.54 billion, missing the $18.75 billion estimate. However, sales in the region increased 28% year over year, helped by strong demand for iPhone and Mac.
Memory Costs and Supply Constraints Pose Challenges
Apple warned that Mac and iPad supplies could remain tight in the December quarter as demand exceeds expectations. Limited availability of advanced processing nodes has also affected the supply of iPhone, Mac and iPad.
Chief operating officer Sabih Khan noted that Apple increased its purchase obligations by $33 billion between the June and September quarters to strengthen memory supplies. Chief executive officer Ternus described the current surge in memory prices as "unprecedented," due to the massive expansion of AI infrastructure.
Apple faced higher memory costs in the September quarter and expects further increases in the December quarter. The company expects these pressures to continue beyond December, with inventory benefits gradually fading.
December Quarter Outlook
Apple chief financial officer Kevan Parekh expects December-quarter revenues to increase 7-10% year over year, potentially making it the company's best quarter ever. The Zacks Consensus Estimate for December quarter sales growth was 5.73%, before the earnings release.
The company expects Services revenue growth of 8-9%, while gross margin is projected at 45-46%, reflecting higher memory costs. Operating expenses are forecast between $20.4 billion and $20.8 billion.
Inside AI Initiatives, Cash Position and Tariff Benefits
Ternus said AI agents offer opportunities but stressed that Apple wants to ensure that users understand the access they grant to these tools. He emphasized that security and privacy would remain priorities.
Apple ended the quarter with $137 billion in cash and marketable securities against total debt of $80 billion. Meanwhile, its Wearables and iPad installed bases reached new record highs.
Parekh also noted that tariff refunds helped support margins. Without these refunds, Apple's overall and product gross margins would have been about 1 percentage point lower sequentially.
Why Buy Apple Shares With ETFs?
Against this backdrop, investors can play Apple through a diversified ETF approach to minimize company-specific concentration risks. This approach allows investors to benefit from any sudden weakness in Apple shares caused by memory pricing, a potential decline in margins and any weakness in China sales.
Meanwhile, investors can buy the dip in Apple shares with ETFs to play the company’s recent earnings beat, a solid holiday quarter outlook, upbeat cash position compared with other Big Tech peers, and gradual-but-steady AI initiatives. With the AI trade currently faltering, Apple’s limited AI exposure can prove to be a boon at the current level.
ETFs in Focus
Global X PureCap MSCI Information Technology ETF (GXPT - Free Report) – Apple weight 18.20%
Fidelity MSCI Information Technology Index ETF (FTEC - Free Report) – Apple weight 15.4%
iShares Top 20 U.S. Stocks ETF (TOPT - Free Report) – Apple weight 14.0%
VanEck Technology TruSector ETF (TRUT - Free Report) – Apple weight 13.6%