When Apple reported its quarterly earnings Thursday, CEO Tim Cook warned that memory constraints are intensifying.

Cook stated Apple will “look at a range of options,” which analysts remarked could include raising prices or signing longer supplier agreements.

A number of tech companies highlighted supply constraints due to AI demand in their earnings reports.

The global memory crisis played an outsized role in tech earnings season, which hit an apex this week. Apple CEO Tim Cook warned it’s just the beginning.

“We believe memory costs will drive an increasing impact on our business,” Cook remarked in the Q&A portion of his company’s earnings call on Thursday after repeatedly telling analysts that the organization faced “supply constraints” in the latest quarter. “We’ll continue to evaluate this.”

Apple’s earnings report, which included an almost across-the-board beat and better-than-expected revenue guidance, came a day after Meta and Microsoft mentioned in their results that higher memory prices contributed to their elevated forecasts for capital expenditures for the year.

In projecting $190 billion in capex for 2026, up 61% from last year, Microsoft CFO Amy Hood stated on a conference call that she anticipates a $25 billion impact from higher component prices. Meta noted that “expectations for higher component pricing” contributed to its capex forecast increasing from a high of $135 billion to as much as $145 billion.

Across the tech landscape, executives have been voicing their concerns about soaring prices for memory, which faces a worldwide crunch due to insatiable demand for artificial intelligence infrastructure. Each generation of Nvidia chip, the processor at the heart of the AI boom, packs in more memory, further constricting an already stressed industry.

Memory maker Micron, whose stock is up roughly 570% in the past year, has been working to add capacity, as have competitors Samsung and SK Hynix. With AI chips and data centers sucking up so much supply, memory for consumer devices like PCs and smartphones is increasingly scarce, and thus much more expensive.

That’s why it was such a significant topic on Apple’s call.

Cook remarked Apple’s revenue growth of 17% for the fiscal second quarter exceeded its guidance “despite supply constraints.”

He commented the impact in the December quarter was “minimal” and that there was a bit more of a hit in the March period. For the quarter that ends in June, Cook mentioned the significant impact will be on several Mac models “given the continued high levels of demand that we’re seeing.”

Analysts wanted to know what Apple was going to do in response, but they didn’t get much by way of specifics. Cook noted on a couple occasions, “We”ll look at a range of options.”

Since January, when AI memory began selling out, Wall Street has been asking consumer electronics companies like Apple and Dell how they will handle the memory shortage, and if they might be forced to raise prices or cut margins.

“Apple showed that even the best operators can’t fully escape the memory squeeze,” remarked Jake Behan, head of capital markets at Direxion. “Tim Cook’s warning of ‘significantly higher’ costs in the coming quarters tells you how real the AI-driven supply crunch has become for the entire industry.” Furthermore, experts in earnings report note the continued relevance.

Apple has so far largely avoided price hikes. In March, the firm proclaimed a number of recent products, including its iPhone 17e, a refreshed iPad Air laptop with an M4 chip in 11-inch and 13-inch sizes. It also unveiled the MacBook Neo, a low-cost laptop that Cook admitted had even higher demand than he expected.

The memory conundrum will soon fall in the lap of incoming CEO John Ternus, Apple’s longtime hardware boss who is succeeding Cook at the help in September.

Eat the costs?

William Kerwin, an analyst at Morningstar, told CNBC in an email that one option for Apple would be to enter into longer-term supply agreements to secure more favorable pricing. He noted that memory maker Sandisk discussed “numerous latest agreements just like this” in its earnings call on Thursday.

Needham analyst Laura Martin stated that while she doesn’t know what Cook was referring to in suggesting the business would consider options, it’s not great to see capacity constraints “for a enterprise with a core competence in hardware.”

Wall Street took the news in stride, reacting positively to Apple’s forecast for revenue growth this quarter of 14% to 17%, and sending the stock higher. Analysts were expecting growth of 9.5% to $103 billion, according to LSEG.

Gil Luria, an analyst at D.A. Davidson, told CNBC that Apple has been able to avoid hiking iPhone prices but that “arrangements with memory suppliers may have to change.” He stated some options for Apple would be to reduce the memory available in products, growth the price of handsets, or eat some of the extra cost and absorb lower gross margins.

IDC analyst Nabila Popal remarked the range of options could relate to increased prices for iPhones, but they won’t necessarily be distributed evenly across all models. 

“I think they will focus price increases on the Pro/Max while keeping the base model the same in the following Spring,” she noted by email. This also touches on aspects of earnings report.

Some analysts commented the memory crunch represents an opportunity for Apple to gain sector share this year as other manufacturers face even greater challenges.

Morningstar’s Kerwin mentioned, regarding the latest results, that he’s “impressed with Apple’s profitability amidst immense memory pricing inflation.”

Behan from Direxion echoed the sentiment that Apple is better positioned than just about anyone.

“Apple’s scale, balance‑sheet strength, and relatively conservative approach to capex will likely give it more flexibility than most to navigate these constraints over time,” he noted.

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