Apple (NASDAQ: AAPL) is absorbing a sharp sell-off after CFO Kevan Parekh guided December-quarter gross margin to a range of 45% to 46%, missing analyst expectations of 46.3%.

The stock fell to $325 in morning trading, a 4% drop from the prior session’s close of $338.32, making it the worst performer among large-cap tech peers on the day.

CEO John Ternus, navigating his first earnings call since succeeding Tim Cook, described memory pricing as “unprecedented” and warned that Apple expects its memory purchase costs to keep climbing beyond the December quarter.

The scale of Apple’s exposure is visible in its supply chain commitments, with COO Sabih Khan disclosing that purchase obligations jumped by $33 billion between the June and September quarters alone.

Memory constraints are also expected to limit Mac and iPad availability during the holiday period, even as demand for those products is running ahead of company forecasts.

The irony is that Apple’s underlying September-quarter results were strong, with EPS of $2.10 beating Bloomberg’s consensus estimate of $2.00 and revenue of $114.48 billion clearing the $113.46 billion estimate.

iPhone revenue led the performance at $57.58 billion, surpassing analyst estimates of $56.48 billion, while Parekh projected that the December quarter should be the best revenue quarter in Apple’s history, with total revenue growth of 7% to 10%.

A one-time tariff refund, however, flatters those results, having contributed $0.05 to EPS and a full percentage point to the reported 47.9% gross margin; stripped of that benefit, margins would have declined from the June quarter.

Services revenue of $31.57 billion nearly matched its $31.58 billion estimate, but Parekh’s guidance for Services growth of 8% to 9% in the December quarter fell short of the 10.7% analyst expectation, adding another layer of concern.

Greater China continued to weigh on the overall picture, with Apple reporting $17.54 billion from the region against an estimate of $18.75 billion, a gap that points to ongoing competitive pressure in a critical market.

The margin squeeze is structural rather than cyclical: Apple sits on the consumer hardware side of the AI infrastructure build-out, meaning rising memory prices embed directly into the cost of every iPhone, Mac, and iPad it ships.

Even the Services segment carries new cost exposure, since server-side Siri AI processing generates inference expenses that did not exist at meaningful scale in prior periods.

Among peers, Microsoft (NASDAQ: MSFT) slipped 0.7% to $503.80, while Meta Platforms (NASDAQ: META) edged up 0.3% to $608.25, and Alphabet (NASDAQ: GOOGL) gained a matching 0.3% to $279.70, leaving Apple with the steepest single-session loss in the group.

Over the prior week, Apple was down 6%, Microsoft fell 5%, and Alphabet declined 12%, suggesting broader sector pressure was already building before Apple’s earnings release.

Bulls can draw comfort from an installed base exceeding 2.5 billion active devices and iPhone Duo demand that remains ahead of available supply, but management’s own language about memory pricing offers little reason to expect near-term margin relief.

U.S. stock futures are pointing to a lower open, with Palantir Technologies (NASDAQ: PLTR) results and midterm election voting adding further uncertainty to the session’s backdrop.