Week in review: Apple’s blowout quarter hides a looming problem. Memory prices are exploding

Apple reported a rare combination investors crave: acceleration at scale. Revenue jumped 16%, while iPhone sales surged 23%, the strongest growth in more than four years. Demand for the latest iPhone family did the heavy lifting, confirming that the upgrade cycle still has life left in it.

Yet the market barely reacted. Apple shares were largely unchanged, a sign investors are already looking past the quarter and toward a tougher setup ahead. After such a strong year, comparisons get harder. If next year’s iPhone does not deliver something genuinely new, year-over-year growth could quickly flip negative.

The memory crunch investors are worried about

One reason analysts are cautious sits deep in the supply chain: memory.

Prices for key memory inputs are rising sharply, in some cases three, four, even five times higher than recent levels. Memory chips sit inside almost everything Apple sells, from iPhones and Macs to wearables. When those costs spike, margins come under pressure.

This is not an Apple-specific problem. Memory is used across handsets, computers, cars, and industrial devices. What makes this cycle different is where demand is coming from.

Data centres are soaking up supply

The shortage is being driven by the global data centre buildout. Hyperscalers such as Microsoft, Amazon, and Google are racing to expand capacity, buying vast numbers of accelerators from Nvidia.

Those Nvidia systems come bundled with enormous amounts of high-end memory. The result is a supply squeeze that ripples outward, hitting consumer electronics just as demand is stabilising.

For Apple, the implication is straightforward: components are getting more expensive, and something has to give.

Pricing power is Apple’s safety valve

Apple does have an advantage that most hardware companies lack. It has pricing power.

If memory costs keep climbing, Apple can pass some of that increase on to consumers. That could mean higher iPhone prices over the next few product cycles. A new premium form factor, such as a folding iPhone, would make that easier by lifting average selling prices and absorbing higher input costs.

The contrast with Nvidia is instructive. Nvidia sells primarily to businesses, and memory is a smaller fraction of the total cost of a server system. Apple, by contrast, sells to consumers who notice price hikes immediately.

AI ambitions and the old Siri problems

Rising costs are colliding with another pressure point: AI.

Apple has signalled it is serious about catching up, striking partnerships and acquiring specialist startups to bolster its capabilities. But Siri remains well behind the frontier models from OpenAI and Anthropic.

The challenge is not just building a powerful model. Apple needs AI that can safely operate native apps such as calendar, email, and notes, and do so on-device where possible. That is technically hard, slow to deploy, and memory-intensive at a time when memory is getting more expensive.

If Apple fails to deliver a convincing AI leap, the risk is not abstract. Slower innovation would make it harder to sustain iPhone demand just as prices are rising.

Strong now, but the pressure is mounting

This is why the stock barely moved after a stellar quarter. Investors are already thinking about next year, about component inflation, about whether the next iPhone will feel special enough, and about whether Apple’s AI story can land in time.

For now, Apple is executing superbly. But the next phase will test a different set of skills: managing costs in a distorted supply chain, justifying higher prices to consumers, and finally proving that Siri can belong in the AI era rather than chase it.