Apple said on Monday that its profits were being squeezed by the artificial intelligence boom, which has caused the prices of components that go into its devices to soar.
In the three months through September, Apple’s revenue grew nearly 12 percent from a year earlier, to $114.48 billion. Profit rose nearly 12 percent to $30.71 billion. Both numbers topped Wall Street’s expectations.
Apple also broke its record for revenue and profit in a fiscal year, which ended in September.
Kevan Parekh, Apple’s chief financial officer, said in an interview that the company’s profits were hurt by higher prices of memory chips, a key component of its devices. The company also faced “supply constraints” in a manufacturing process that produces chips for its devices.
Apple’s concern about the cost of some components comes after increasing alarm on Wall Street about the technology industry’s spending binge on A.I., and just one business day after Apple reclaimed the title of the world’s most valuable publicly traded company.
Despite its deep pockets and sprawling supply chain, Apple is still vulnerable to the ripple effects of A.I. Unlike other big technology companies, Apple has not invested heavily in it. But the company is facing a global shortage in memory and storage chips because so many of those components are being used for the A.I. chips that fill giant data centers.
Other companies have also warned that the memory chip shortage is hurting their business. Last week, the chipmaker Intel said its core business selling chips for personal computers was suffering because component prices were skyrocketing. Intel’s stock price dropped more than 29 percent a day later.
Apple has taken steps to address the pressure on its profits. In June, it raised the prices of its Macs and iPads. In July, it made the starting prices for the new iPhone 18 Pro and older models of the iPhone $100 higher than their predecessors. Apple has also created a new high end for some of its products, including the iPhone Duo, a foldable smartphone that starts at $1,999, and the touch-screen MacBook Pro, which starts at $2,899.
When Apple introduced the iPhone 18 Pro in July, it also refreshed the smartphone with a more advanced chip and camera system, a longer battery life and three new colors. These changes have helped to lift iPhone sales, which grew 17 percent from a year earlier to $57.58 billion.
Apple’s business in China, the largest smartphone market in the world, was a disappointment. Its sales there rose 21 percent to $17.54 billion, short of expectations. The company’s iPhones still made up 19 percent of smartphone shipments to distributors in China in the quarter — more than all of its local rivals, except Huawei — according to Counterpoint Research, which tracks the smartphone market.
Apple has “a combination of what seems to be a decent product refresh cycle, new product innovation, a shift to more premium products,” said Charles Rinehart, chief investment officer at Johnson Investment Counsel, an asset management firm. The question for the company, he added, is: “How effectively can they use those tools to offset input cost pressures?”
Apple’s services revenue grew nearly 10 percent to $31.57 billion. The company has been quietly raising the prices for some of its services, including its streaming service, Apple TV, which in August cost $14.99 per month, up from $12.99.
The company saw mixed results in other parts of its core business. Sales of Macs rose more than 23 percent to $10.79 billion. Sales of iPads fell more than 10 percent to $6.23 billion. Sales of wearables, which include products like the Apple Watch and AirPods, fell nearly 5 percent to $8.3 billion.
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