Apple revenue record offset by AI cost warning

Apple said Monday it set a July-September revenue record, driven by iPhone sales and services revenue, but warned that higher memory costs and the ramp-up of Siri AI would reduce gross margin in the final stretch of the year.

Chief financial officer Kevan Parekh said Apple expected gross margin of 45 percent to 46 percent, down from 47.9 percent in the September quarter. He said the forecast mainly reflected higher memory costs and costs linked to the Siri AI rollout.

Chief executive John Ternus, who took over from Tim Cook in September, said Apple was closing the year with its “most ambitious lineup yet” and signalled optimism about sales of recent products during the holiday season.

Apple launched three new phones in September, including the 18 Pro, 18 Pro Max and its first folding phone, the Duo. It also unveiled a Siri AI-powered smart display called HomeView and a MacBook Pro with a touchscreen.

The company overhauled Siri in June through a partnership with Google, using the Gemini model to strengthen the digital assistant. Parekh said Apple believed AI could give customers a reason to upgrade or switch devices.