Apple warns memory and Siri AI costs will squeeze holiday-quarter margins

Apple’s holiday quarter is set to deliver narrower gross margins despite a record July–September performance. In its November 2 earnings update, the company forecast gross margin of 45%–46%, down from 47.9% in the September quarter. Chief Financial Officer Kevan Parekh pointed primarily to higher memory costs, with the Siri AI rollout adding expense.

The warning accompanied a strong set of results. Apple reached a revenue record for the July–September quarter, driven by iPhone sales and services revenue. Both sales and profit exceeded analysts’ expectations, according to earnings coverage published by Yahoo Finance.

The earnings beat did not prevent a stock decline. CoStar News reported that Apple’s shares fell despite a 12% revenue increase, putting the margin warning alongside continued sales growth.

Apple overhauled Siri in June through a partnership with Google, using its Gemini model. Parekh’s cost warning concerns the ramp-up of that assistant. He did not put a separate dollar figure on Siri’s contribution to the expected margin pressure.

Apple has largely avoided the expensive data-center spending race undertaken by its major technology peers, CoStar noted. Analysts expected the company to spend $11 billion in the fiscal year that ended in September, according to the Yahoo Finance article. That figure was an estimate of investment spending, distinct from the memory and Siri costs Parekh identified in his margin outlook.

Parekh’s commercial argument is that AI gives customers a reason to upgrade their devices or switch to Apple. He called the latest capabilities a “compelling reason” for those purchases. His case extends beyond hardware: he also pointed to opportunities across third-party apps, partnerships and Apple’s own products.