Apple Beats Estimates but Shares Fall in Pre-Midterm Tech Selloff

For another week, a major tech company has discovered that meeting earnings expectations is no longer sufficient for Wall Street. Apple has become the latest target, with the timing particularly challenging for the troubled technology sector.

Apple posted $114.48 billion in fourth-quarter revenue and earnings per share of $2.10, surpassing analyst forecasts of $113.39 billion and $1.99 per share. That appears strong on the surface.

Market response did not match the positive numbers. Apple shares fell 2% after the bell, with investors focusing on less favorable aspects.

The outlook is the key focus. Apple anticipates gross margins slipping to approximately 45-46% in the December quarter from 47.9%, due to higher memory costs affecting profits. Additionally, services revenue is expected to grow only 8-9%, below the anticipated 10.7%.

Furthermore, tariff refunds boosted the recent quarter's figures. This raises doubts about how much of the current earnings momentum will persist.

In recent weeks, Wall Street has become increasingly harsh on technology earnings. Strong numbers are no longer adequate, and weak forecasts face severe penalties. Such an environment does not encourage buying into high-priced tech stocks.

The S&P 500 declined 0.5% on the day, while the Nasdaq lost 1.1%. Notably, equities began the session on strong footing. The S&P 500 gave up a 1.1% advance to end lower, with selling concentrated in technology rather than across the broader market. In comparison, the Dow gained 0.4%.

This reinforces that worries about artificial intelligence investments, valuations, and long-term profits remain present.

Today marks the US midterm elections, adding new uncertainty for Wall Street.

Control of Congress is at stake, with investors monitoring whether Republicans keep both houses or Democrats gain ground, potentially complicating fiscal and legislative plans of the Trump administration.

Looking forward, attention is on whether Apple pulls the tech sector down and if another early rally fades by the close.

The elections could offer a diversion or clarity if political uncertainty resolves. However, technology stocks appear to face deeper challenges, and conditions may worsen before improvement.