Apple Shares Slip on Warnings Over Memory Costs and AI Spending
Tech giant projects lower margins as it grapples with rising expenses for artificial intelligence development.
Apple shares fell in pre-market trading after the company projected a challenging outlook for its gross margins. The decline follows a surge in memory costs which management described as an unprecedented trend that is expected to persist beyond December.
New CEO John Ternus noted that the company's competitive advantage in securing components at lower prices is shrinking. Gross margin for the quarter ending in September was 47.9 percent and the forecast for the upcoming period sits between 45 and 46 percent.
Beyond manufacturing cost pressures, the company has ramped up investments to expand Siri with a focus on artificial intelligence. This move increases operating expenses at a time when consumers are dealing with the rising global cost of living.
Recent financial performance showed revenue of 114.5 billion dollars in the fourth fiscal quarter. iPhone sales reached 57.58 billion dollars which beat market expectations despite a staggered release schedule for premium models.
The stock decline reflects investor concerns regarding company profitability in an environment of high costs. Pressure on the margins of major tech firms may reduce risk appetite for global assets and strengthen the search for safety in financial markets.
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