Apple's Record Earnings Can't Hide an Inevitable iPhone 18 Price Hike

Apple has once again demonstrated its market dominance with a spectacular financial report for the fourth quarter of 2025. The company announced a record-breaking revenue of $143.756 billion, a 16% year-over-year increase. Net profit soared to $42.097 billion, also up 16%, while the gross margin reached an unprecedented 48.2%. The driving force behind this success was, unsurprisingly, the iPhone.


Apple's Record Earnings Can't Hide an Inevitable iPhone 18 Price Hike

 

iPhone sales revenue surged by an impressive 23% year-over-year to $85.27 billion, exceeding all expectations. While Apple doesn't disclose unit sales, estimates suggest that nearly a million iPhones have been sold daily since the latest model's launch. CEO Tim Cook described the performance as "fantastic" and "extraordinary," noting record-breaking demand across all geographic segments. The Greater China region saw a remarkable resurgence, with revenue jumping 38% to $25.526 billion. The total number of active iPhones worldwide has now hit an all-time high of 2.5 billion.

 

Apple's Record Earnings Can't Hide an Inevitable iPhone 18 Price Hike

 

Despite this stellar performance, a significant challenge looms: the rising cost of memory components. This concern tempered market optimism, resulting in a modest 0.72% rise in Apple's stock price. The industry is closely watching how Apple will protect its profit margins in the face of this inflationary pressure, especially after the stock had seen eight consecutive weeks of decline prior to the report.

 

Apple's Record Earnings Can't Hide an Inevitable iPhone 18 Price Hike

 

The primary issue stems from negotiations for LPDDR memory prices. Apple has shifted from semi-annual to quarterly negotiations, and reports from ZDNET Korea indicate that suppliers like Samsung Electronics and SK Hynix are pushing for substantial price increases for iPhone memory, with hikes potentially reaching as high as 100%. Analyst Ming-Chi Kuo suggested that Apple's strategy for the upcoming iPhone 18 series is to avoid a price increase if possible, at least for the entry-level models, to maintain market share.

When questioned about potential price hikes during the earnings call, Tim Cook remained non-committal, stating he didn't want to speculate. However, he acknowledged that Apple is currently chasing suppliers to meet demand and is facing supply constraints. While the impact of memory prices was minimal last quarter, it is expected to become more pronounced. The consensus is that a price increase for the iPhone 18 is highly probable. The most likely scenario is that the starting price will remain unchanged, but higher-storage models will become more expensive to preserve Apple's high-profit margins. The move to TSMC's 2nm process for the iPhone 18 chip will also add to the cost pressures.

Beyond the iPhone, Apple's other business segments showed mixed results. The services division met expectations, reaching $30 billion in revenue and solidifying its position as the second-largest income source. Mac sales declined, which was expected given the limited new releases compared to the previous year, but a rebound is anticipated with a slate of M5-powered devices on the horizon. The iPad business saw a surprising surge thanks to holiday sales, while the wearables category experienced a decline, which Apple attributed to supply chain constraints for the new AirPods Pro 3.

 

Apple's Record Earnings Can't Hide an Inevitable iPhone 18 Price Hike

 

In the background of its hardware success, Apple is quietly accelerating its AI strategy. During the earnings call, Tim Cook confirmed a partnership with Google to enhance Siri and mentioned the development of Apple Foundation Models, which will run on-device and on Apple's private cloud to maintain privacy standards. Just before the report, it was revealed that Apple acquired Q.ai, an Israeli AI startup, in its largest acquisition since Beats. This move is seen as a strategic investment to enhance user interaction for future products, potentially including smart glasses and a more advanced Siri, ensuring Apple is well-positioned for the next era of computing.

 

Apple's Record Earnings Can't Hide an Inevitable iPhone 18 Price Hike

 

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