Today is John Ternus's first earnings call as Apple CEO, and the company heads into the quarter with a high valuation considering its mediocre earnings growth rate. In other words: expectations are big. Here's what to watch for.
-- Memory and storage costs. The prices of DRAM and NAND, two key components inside every iPhone, iPad and Mac, have quintupled since last summer. AI hyperscalers need the components inside the servers running their models and they're paying through the nose to secure supply. Apple has already warned markets that its own costs will jump as a result. But how much? Some analysts have warned that cost expectations don't fully reflect how hard this will hit Apple's bottom line.
-- Duo availability. Apple fans are scooping up Apple's new foldable iPhone, mixed reviews be damned. The trouble is Apple can't make them fast enough, leading to ship dates out to January. And then there's "crackgate"-the small number of Duos whose screens are cracking soon after buyers unbox them. Expect supply chain updates for how Apple is fixing these issues.
-- Staggered launch and price increases. Apple made big changes to its iPhone launch schedule in the September quarter. It didn't release a base model iPhone 18, just the Pro and Pro Max. And it raised prices across the board. How did consumers react? That determines whether Apple meets expectations.
-- Ternus speaks. Expectations are high for the mechanical engineer who is suddenly one of the highest-profile CEOs. Apple is trading at 36 times next year's expected profits even though its earnings are only expected to grow about 1%, estimates Oppenheimer analyst Martin Yang. Ternus has said very little about what direction he intends to take the company. Monday is his biggest opportunity to date to articulate his vision.
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