Apple is expecting "significantly higher memory costs" heading into the remainder of 2026, CEO Tim Cook said Thursday during Apple's second-quarter earnings call, as the tech giant faces down the memory shortage impacting the rest of the industry.
Cook -- who is stepping down as CEO on Sept. 1 and will be replaced by John Ternus, the company's senior vice president of hardware engineering -- said Apple was partially unaffected by the memory shortage during this quarter, as it already had a lot of devices in stock. But beyond June, costs will rise.
"We believe memory cost will drive an increasing impact on our business, and we'll continue to evaluate this," Cook said. "We'll look at a range of options."
As AI data centers continue to be built to meet increasing demand for AI services, their need for memory and other components has reduced the supply for consumer devices, driving up the costs of laptops and phones like Apple's MacBooks and the iPhone, as well as external storage products.
Analysts are looking at how Apple will meet demand amid increased memory costs and supply constraints in the coming quarters, said Nabila Popal, senior research director at the International Data Corporation.
"While Apple remains better positioned than its competitors to manage the memory crisis and get the supply it needs, the key question will be deciding the perfect balance strategically between increasing prices and maintaining profitability or focusing on gaining share by not increasing prices," Popal said.
Cook said the current primary constraint is the "availability of advanced nodes our SOCs are produced on," rather than memory, which has affected the iPhone. Going forward, he said this would likely also impact the Mac Mini, Mac Studio and MacBook Neo in particular, given their artificial intelligence tools and popularity.
Customers have pounced on the desktop Mac Mini and Mac Studio to use with AI agents, Cook said, and it may take several months for the supply of those computers to recover. He didn't say when the MacBook Neo would be restocked to meet demand.
"The customer response to Mac Neo has just been off the charts, with higher-than-expected demand and the March quarter record for customers," Cook said.
Overall for the quarter, Apple announced revenue of $111 billion, up 17%, which Cook largely attributed to the "extraordinary demand for the iPhone 17 lineup."
During the call, Cook highlighted Apple Intelligence AI features integrated into the iPhone 17 as a driver of its popularity, along with its improved camera, design, performance and durability.
"We're seeing double-digit growth in the majority of the markets we track," Cook said. "And we set a new March quarter record for upgraders as well."
With US companies now able to apply for refunds on duties they paid to the US government as a result of President Donald Trump's foreign tariffs in 2025, Cook said Apple is following the process and will "reinvest any amount we receive back into US innovation and advanced manufacturing."
Trump had invoked the 1977 International Emergency Economic Powers Act to justify raising taxes on items imported from across the globe last year, but the Supreme Court struck down those tariffs in February. Prior to the ruling -- which said the emergency powers law did not authorize the use of tariffs to counter national emergencies -- the US government collected around $166 billion in revenue from US companies, including Apple.
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Apple on AI
When asked about AI, Apple noted that it is "clearly investing more" across operating expenditure and R&D. While AI is "a really important investment area for Apple," the company will be exploring it incrementally on top of its typical product development and release.
According to industry analyst Emarketer, Apple's AI strategy and its partnership with Google Gemini for Siri will be vital moving forward.
"The results suggest Apple is continuing to weather the global memory chip crunch, pointing to the tech giant's supply chain resilience," Emarketer senior tech analyst Jacob Bourne said in a statement. "The question is whether incoming CEO John Ternus can translate this momentum into a credible AI strategy (and) Apple's willingness to lean on external AI innovators."
During the earnings call, Cook wouldn't be drawn on what to expect next from the Siri AI overhaul beyond teasing its impending arrival, nor did he comment on the rise of AI agents in phones (and how it might play into future iPhones). But he did acknowledge that the collaboration with Google on AI is going well, saying, "We're happy with where things are, and we're happy with the work that we're doing independently as well."
And though Cook will be CEO for one more full quarter and its subsequent earnings report, when asked if he had any advice for his successor, Ternus, he noted that one of the most important decisions he'll make is where to spend his time -- ideally, where it will be of greatest benefit to the company and its customers. And also, to never forget Apple's north star.
"We're about making the best products in the world that really enrich other people's lives," Cook said. "If you keep focusing on that and make your decisions around that, it will produce a great business, and we'll be able to build more products and do it all over again."
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