Tim Cook spent part of July 30 thanking Apple shareholders at the end of what he confirmed would be his last earnings call as CEO. John Ternus takes over Sept. 1, and Cook moves to executive chairman.
The farewell was warm. The statement that followed was not.
Cook described Apple’s memory cost situation as a “100-year flood,” language he said he has never used in more than 40 years in the consumer electronics industry.
Apple has already raised prices on Macs and iPads. It expects memory costs to climb further in the current quarter. And it warned that supply constraints will affect iPhone, Mac, and iPad sales in September, Yahoo Finance reported.
What Tim Cook said about memory prices on Apple’s Q3 2026 earnings call
Cook’s exact words on the call: “On the pricing front, you know, we reluctantly raised prices. I would say we did it because we’re in what I would characterize as a 100-year flood on memory pricing with exponential increases in memory prices, so that was the rationale for it.”
Apple’s Q3 2026 numbers came in ahead of estimates. Earnings per share were $2.02 against a $1.89 consensus. Revenue was $109.4 billion versus the $108.8 billion estimate. iPhone revenue hit $54.2 billion, above the $53.5 billion projection.
More Apple:
- Apple stock move vindicates Palantir CEO warning for AI industry
- Apple’s iPhone cost problem reveals AI’s hidden bill
- Apple’s 2027 hardware refresh sends Wall Street a warning
But the memory issue dominated the call. CFO Kevan Parekh said that without rising memory costs, Apple’s gross margins would have been materially stronger.
Memory accounted for more than the entire sequential decline in adjusted gross margin between the March and June quarters, Benzinga reported. Cook confirmed Apple has paid rising memory costs for three consecutive quarters.
Why memory prices are driving Apple to raise prices on its products
The memory cost surge is driven by AI data-center demand. Companies including Nvidia, Microsoft, Amazon, and Meta have been buying high-bandwidth memory and advanced DRAM at a pace that has overwhelmed supply.
SK Hynix, Samsung, and Micron, the three companies that control the global DRAM market, have largely sold out their premium AI memory capacity through much of 2026. A federal class-action antitrust lawsuit filed in California in June 2026 accuses all three of coordinating a supply restriction that drove conventional DRAM prices up approximately 700% over four years, Rain Intelligence noted, though those claims have not been proven in court.
The price impact on Apple’s own products is specific and measurable. TechInsights estimates the DRAM package in an iPhone 18 Pro will cost Apple approximately $145, MacRumors reported, compared with roughly $39 for the equivalent package in the iPhone 17 Pro, a 272% increase for the same memory.
Cook called for more competition in the memory supply chain. “Primarily the DRAM market has three suppliers,” he said, and suggested the industry needs to expand beyond them.
He added that Apple expects to pay “even higher memory costs” in the September quarter, only partially offset by lower prices on some non-memory components and existing inventory purchased before prices surged.
Cooper/Getty Images
What the memory flood means for the iPhone 18 and Apple stock
Cook did not confirm whether Apple will raise iPhone prices when the iPhone 18 Pro and the company’s first foldable device arrive in September. Multiple analysts believe prices will go up.
SK Hynix’s own July 2026 forecast identified 2027 as the worst year for supply shortages in semiconductor history, according to Silicon Analysts. Bloomberg Intelligence projects conditions may ease by 2028 as new capacity comes online, 24/7 Wall St noted, but that is a minority view and does not help Apple in the near term.
Apple’s stock fell sharply after the earnings call as investors processed the supply constraint warnings and the below-consensus Q4 outlook, Barron’s reported. The company’s shares had been up 23% in 2026 heading into the print, outperforming most large-cap tech peers that have been weighed down by AI capital spending concerns.
The memory crisis changes part of that equation.
What Cook’s final earnings call means for Apple investors going forward
Cook is handing off to Ternus at a complicated moment. The Q3 beat was real. The memory problem is also real. Apple paid higher memory costs for three straight quarters and expects to pay more in the fourth. The company’s gross margins are under pressure in a way that is not explained by demand softness but by a structural supply crisis in a market controlled by three companies.
Apple has 1.5 billion paid subscriptions across its services platform, and services revenue has been growing consistently. But services brought in $30.7 billion in Q3, slightly below the $31.3 billion the Street expected. The hardware business is carrying a cost burden that services growth alone cannot offset at current memory prices.
The “100-year flood” language was deliberate. Cook has spent four decades in consumer electronics. He chose that phrase to make sure no one walked away thinking this resolves quickly.
Whoever is running Apple’s earnings calls in 2027 is almost certainly going to be talking about memory costs, too.
Related: Bank of America doubles down on Apple stock ahead of earnings
