Key Takeaways
- Apple guided its December-quarter gross margin to 45%-46% this week because memory costs are rising, and those same prices have sent Micron’s sales soaring.
- Jim Cramer called Apple a winner from the Democratic midterm sweep, because slower data center construction could let DRAM inventories build up.
- Analysts still expect Micron’s revenue to roughly double in fiscal 2027, and Apple’s CEO expects memory prices to keep rising after December.
- A slower build should help Apple, but the relief is more likely to show up in fiscal 2028, when analysts already expect a profit rebound, than in the next couple of quarters.
Apple (AAPL) warned on Monday that memory costs will take another bite out of its margin. A day later, voters may have handed it some relief.
A Democratic wave swept Tuesday’s midterms, and data centers were on the ballot. Gina Hinojosa won the Texas governor’s race after pledging a moratorium on new data center construction. Texas accounts for more than 25% of planned US capacity by 2030, according to Yahoo Finance. In Ohio, voters in at least 14 municipalities passed bans or other restrictions.
That’s a blow to the AI build-out, and to memory makers like Micron (MU), whose chips the build-out has been soaking up.
Jim Cramer saw the other side of the trade. His reaction on X on Wednesday:
“Apple winner… slowdown in build means inventories can build of DRAMs”
Apple shares touched an all-time high the same day.
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Apple’s memory bill keeps climbing
Apple guided its December-quarter gross margin to 45%-46%, down from 47.9% in the September quarter (about a point of which came from tariff refunds). CEO John Ternus said on the earnings call that beyond December, “we see the pricing for memory purchases continuing to increase.”
Bloomberg Intelligence senior analyst Anurag Rana said on Tuesday’s episode of the Bloomberg Tech podcast that “the cost of memory is probably the most important thing right now that’s causing that product margin to decline.”
Analysts have already priced in the squeeze. They expect Apple’s normalized EPS growth to slow to about 8% in fiscal 2027, which ends in September 2027, then pick back up to about 13% in fiscal 2028:
With Ternus expecting memory prices to keep rising, I don’t see anything this week that lifts fiscal 2027. A slower build could make that fiscal 2028 rebound easier to hit.
Fewer data centers means more memory to go around
On the same episode, Rana said so much memory is going into the AI trade that everybody is fighting for it.
Veteran tech analyst Dan Ives thinks the election takes some of those buyers out of the fight. He expects it to slow the 800 to 1,000 data centers planned across the US, and posted on X: “We estimate 10% of datacenters will not happen now.”
Those data centers would have used memory. Cramer is betting that memory piles up as DRAM inventory Apple can buy.
There’s also an early sign that prices were cresting before the vote. Bloomberg Economics chief US economist Anna Wong wrote on X that “our latest data suggest the monthly pace of price increases across the affected categories has now passed its peak.” Her data tracks what shoppers pay for gadgets like phones and computers, so it says little about what Apple pays for chips.
And Apple has plenty of margin to win back. Its gross margin climbed from 43.3% in fiscal 2022 to 46.9% in fiscal 2025:
The December guide gives back a good chunk of that climb.
Micron’s buyers aren’t backing off yet
Still, the analysts who cover Micron aren’t forecasting a glut. They expect its revenue to roughly double to $276 billion in fiscal 2027, which ends in August 2027, after $133 billion in fiscal 2026. They see it reaching $320 billion in fiscal 2028:
If Ives is right that 10% of planned data centers won’t happen, the other 90% still will. I wouldn’t expect that to change Micron’s picture much, especially after SK hynix predicted a memory shortage through 2030.
Apple wins, on a delay
Cramer has this one right. Fewer AI data centers in the US means less competition for the memory Apple needs, and that’s good for its margin. But Apple’s own CEO expects memory prices to keep rising after December, and Micron’s estimates say the AI buyers are staying.
The way I see it, Apple is a winner here, just a slow one. I’d wait for Apple’s March-quarter margin guide in late January before paying a record price for relief that may not show up until fiscal 2028.
Of course, Hinojosa’s moratorium is still a campaign pledge. Democrats are on track to take the Texas House, but the state Senate looks set to stay Republican, and that could slow the moratorium down.
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