---
title: "Apple, Which Does Not Build Data Centers, Is Paying the Bill for AI Data Centers"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/294444089.md"
description: "Apple reported its strongest June quarter in history—revenue of $109.4 billion and a gross profit margin exceeding 50% for the first time. However, its stock price plummeted 6% after hours, wiping out over $300 billion in market value overnight. The real crisis lies deep within the supply chain: although Apple does not build AI data centers, the costs associated with them are being transmitted to every iPhone and Mac through chips and storage, quietly eroding Apple's profit margins. The gross margin guidance for Q4 has dropped sharply to 47%-48%"
datetime: "2026-07-31T02:37:41.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/294444089.md)
  - [en](https://longbridge.com/en/news/294444089.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/294444089.md)
---

# Apple, Which Does Not Build Data Centers, Is Paying the Bill for AI Data Centers

In the early hours of July 31, Apple released its financial results for the third quarter of fiscal year 2026. Revenue reached $109.4 billion, a year-over-year increase of 16.4%. The gross profit margin hit 50.1%, breaking the 50% threshold for the first time. Revenue, EPS, and operating cash flow all reached record highs for the same period in previous years.

This was Apple's strongest June quarter report in its history. Yet, the stock price fell 6% in after-hours trading, with market capitalization evaporating by over $300 billion overnight.

The market is focused on the guidance for the fourth quarter—the gross profit margin is projected to drop from 50.1% to the 47%-48% range, a decline of 2 to 3 percentage points. While the numbers themselves may seem mundane, the forces driving this decline are hidden deep within Apple's opaque supply chain.

The four major cloud providers are set to spend a combined $725 billion on capital expenditures this year, squeezing Apple's manufacturing costs from the supply side. TSMC's advanced process capacity is being heavily occupied by AI chips, while DRAM capacity is being swallowed by AI servers, causing storage chip prices to skyrocket. Apple's capital expenditure over the past nine months was less than $6.8 billion, more than 100 times less than that of the cloud providers.

**Apple does not build AI data centers, but the costs of AI data centers are being transmitted to every iPhone and Mac through two channels: chips and storage.**

This was Tim Cook's last earnings call as CEO. On September 1, John Ternus, Senior Vice President of Hardware Engineering, will take over. On his first day, he will face a squeeze spreading from the supply side.

## The Moisture in the 50% Gross Margin

A gross profit margin of 50.1% marks Apple's first time breaking the 50% barrier. The figure looks impressive, but it includes a one-time adjustment of approximately 2 percentage points from tariff refunds. Excluding this, the actual gross margin is about 48.1%, still a year-over-year increase of 1.6 percentage points. The improvement stems from a higher proportion of iPhone Pro series sales and an increased share of services business.

**The real signal lies in the next quarter.** CFO Kevan Parekh provided a Q4 gross margin guidance midpoint of 47.5%, a direct drop of 2.6 percentage points from this quarter's 50.1%. Even using the adjusted basis for comparison, moving from 48.1% to 47.5% represents a 0.6 percentage point decline. Apple is passing rising supply chain costs onto its profit margins.

R&D spending is another data point worth examining. Single-quarter R&D expenditure reached $11.7 billion, a year-over-year increase of 32.3%, twice the rate of revenue growth. Cumulative R&D spending over nine months totaled $34 billion, an increase of $8.3 billion year-over-year. Cook explicitly stated on the call that "Apple as a whole is investing more money in AI." This funding is directed towards self-developed AI chips, Siri AI, and the integration of AI capabilities into software platforms. However, AI-related paid services have not yet generated scaled revenue in the short term—R&D expenses are rising, AI revenue is not yet realized, and the cost baseline has been pushed up.

Of the $2.02 EPS, $0.11 came from tariff refunds, leaving approximately $1.91 excluding this factor. This beat market expectations by about $0.04, but the excess came from one-off factors, with no improvement in operational performance.

## AI Data Centers Are Eating Into Apple's Supply Chain

This is the deepest signal in this financial report.

Microsoft, Meta, Google, and Amazon are set to spend a combined $725 billion on capital expenditures this year, a staggering 77% year-over-year increase. Apple, which does not build AI data centers, spent only $6.8 billion on capital expenditures over nine months, a year-over-year decrease of 28%.

However, Apple cannot escape the cost transmission from the AI infrastructure boom. Cloud providers need training and inference chips, while Apple needs terminal processors and memory. Although the products differ, they must compete for capacity from the same suppliers.

**First channel: TSMC's advanced processes.** Apple's self-developed SoCs rely on advanced processes like N3. N3 capacity for 2026 is 100% sold out, with about 60% taken by AI chip customers; this proportion is expected to rise to 86% in 2027. AI chips are crowding out consumer electronics. Cook confirmed on the call that supply constraints in the June quarter were mainly concentrated on Macs, and will spread to iPhones and iPads in the September quarter. He attributed the cause to "demand growing too fast"—without naming AI specifically, but the industry knows clearly who is grabbing the capacity.

**Second channel: DRAM.** Contract prices for storage chips surged by over 90% in the first quarter of this year, with Goldman Sachs expecting a full-year increase of 250% to 280%. The reason is straightforward: demand for high-bandwidth memory (HBM) for AI servers has exploded. Samsung, SK Hynix, and Micron have prioritized shifting capacity to HBM, as HBM's gross profit margin is 3 to 5 times that of consumer-grade DRAM. Capacity for consumer-grade DRAM is being squeezed, leading to price increases.

Cook described the surge in storage prices as a "once-in-a-century flood." Storage costs in the March quarter were higher than in the December quarter of last year, higher again in the June quarter, and are expected to rise further in the September quarter. Apple has "reluctantly" raised prices for several Mac, iPad, and home devices in June.

Inventory data confirms the rising costs. The balance sheet shows inventory soaring from $5.7 billion to $11.1 billion, a 94% increase. Part of this is due to early stocking to cope with supply constraints, but rising prices for components like storage also directly push up inventory values. If the storage cost of an iPhone rises by 15%, the inventory value will jump even if the quantity remains unchanged.

$725 billion and $6.8 billion—placing these two figures on the same table makes Apple's situation clear—the bill for AI infrastructure must be paid, just in a different way: transmitted into gross margins through the channels of chips and storage.

## Cross Signals of Doubling Inventory and Surging R&D

There are two more sets of data on the balance sheet worth digging into.

Intangible assets surged from $11.1 billion to $20.3 billion, an increase of $9.3 billion in a single quarter, or 83%. The financial report did not disclose the corresponding transactions separately, but this level of intangible asset growth usually signifies one or more substantial acquisitions or intellectual property transactions. Combined with the 32% growth in R&D expenses, Apple may have completed some kind of technology or team acquisition in the AI field.

**Performance of the services business is another cross-validation point.** Services revenue was $30.7 billion, a year-over-year increase of 12.1%, lower than the previous quarter's $31 billion and about 2% below the market expectation of $31.4 billion. As a core cash cow with a gross margin close to 75%, the slowdown in services growth directly suppresses the market's judgment on long-term profit elasticity. Paid subscription users exceeded 1.5 billion, and feedback on the Siri AI public beta has been positive, but AI-related paid value-added services have not yet formed scaled revenue.

Products are selling well, but capacity cannot keep up. This is Apple's current core contradiction.

iPhone and Mac performed strongly this quarter. iPhone contributed nearly half of the revenue with $54.3 billion in a single quarter, a year-over-year increase of 21.7%, setting a record for the June quarter. Mac revenue was $10.4 billion, a year-over-year increase of 28.7%, far exceeding market expectations by about 20%. The M5 chip MacBook series released in March continues to be in short supply—one of the reasons being insufficient advanced process capacity. Mac sales in Greater China and emerging markets like Southeast Asia hit record highs for the period.

iPad was the only category with negative growth this quarter, with revenue of $6.19 billion, a year-over-year decline of 5.9%, about 10% below market expectations. The main reason is the lengthening replacement cycle for tablets.

## Cook's Last Stand

Cook revealed on the call that Apple is "evaluating all options" to increase DRAM supply sources.

**Market rumors point to Chinese storage manufacturer CXMT (ChangXin Memory Technologies).** Cook indirectly responded: "There are mainly three suppliers in the DRAM market, and it would be good to have more suppliers." Behind this statement lies a potential fundamental shift in Apple's supply chain strategy—expanding from the highly concentrated trio of Samsung, SK Hynix, and Micron to include more sources, including Chinese manufacturers.

CXMT currently holds about 7.67% of the global DRAM market share and is the only Chinese manufacturer with scaled DRAM mass production capabilities.

Cook did not directly respond to whether Apple is testing CXMT's products, but the phrasing "evaluating all options," combined with the urgency of storage prices being a "once-in-a-century flood," sends a clear signal.

## Ternus Takes Over, First Test Is Supply

On September 1, Tim Cook will transition to Executive Chairman of the Board, and John Ternus, Senior Vice President of Hardware Engineering, will succeed him as CEO.

Cook's farewell remarks at the end of the call were gentle and composed: "Thank you to shareholders, especially long-term shareholders, for their trust over the years. This is my last earnings call. The transition is going smoothly, and I am very much looking forward to John Ternus stepping into his new role."

Ternus's first test upon taking office is very specific. The September new product cycle—how much inventory to prepare for the new iPhone, how pricing will proceed, and whether wait times for Mac and iPad can be shortened. That products sell well has already been proven. **What needs to be proven in the September quarter is another matter: whether these products can reach consumers' hands at the original pace.**

Apple's Q4 guidance suggests iPhone growth of about 15%, lower than the market expectation of 17.6%. Mac and iPad will also be impacted by "increasing supply constraints." Coupled with foreign exchange headwinds expected to drag down Q4 growth by about 2.5 percentage points, and continued slowing of services growth—this is the report card Ternus is inheriting.

## Track Three Variables Next Quarter

The core contradiction in Apple's Q3 financial report lies on the supply side. Demand-side iPhone and Mac sales are both rising, but the $725 billion in capital expenditure by cloud providers is squeezing Apple's gross margins and delivery capabilities through TSMC's advanced processes and DRAM. The Q4 gross margin guidance of 47% to 48% is just the first visible signal.

**Track three variables next quarter: the trend of DRAM contract prices, changes in the proportion of AI versus consumer electronics in TSMC's advanced process capacity allocation, and whether CXMT can enter Apple's DRAM supply chain. Any loosening of these three variables will change Apple's cost curve.**

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