Why Did Apple Stock Face Selling Pressure Despite Beating Earnings Expectations? Slowing Gross Margin Guidance, Underwhelming China Performance, and High Memory Costs Weigh on Shares Simultaneously

BlockBeats news, November 3rd, according to data from the BIT stock platform, Apple closed this morning with a decline of 1.83%, and fell another 2.5% in after-hours trading. Why did Apple face market sell-off despite beating earnings expectations? This morning, Apple released its fiscal year 2026 fourth-quarter earnings report, with revenue of $114.48 billion, up 11.7% year-over-year, and EPS of $2.10, both beating expectations. iPhone revenue surged 17.5% year-over-year to approximately $57.6 billion, and Mac revenue grew nearly 24% year-over-year, delivering standout performance. However, although Greater China revenue rose 21% year-over-year to approximately $17.5 billion, it still fell about 6.5% short of analyst expectations; services business growth slowed to approximately 9.8%, the lowest level in nearly three years, and the company's guidance for next quarter's services revenue growth was only 8%-9%, significantly below market expectations.

More critically, management guided next quarter's gross margin down to 45%-46%, below analyst expectations of approximately 46.3%, and a notable decline from this quarter's 47.9%, mainly due to rising memory prices and increased AI-related costs. Although next quarter's revenue growth guidance of 7%-10% was above expectations, against the backdrop of a sharp stock price rally over the past several months and valuations already at elevated levels, the Greater China miss, slowing services growth, and gross margin pressure triggered investors to take profits.