Apple topped its quarterly financial expectations in the first earnings report delivered by Chief Executive John Ternus, who took over the post from Tim Cook in September, though the company remains under pressure from a sharp rise in memory chip costs.

The iPhone maker posted revenue of $114.5 billion for its fiscal fourth quarter, up 12% year-over-year and ahead of Wall Street's target of $113.4 billion. Profit came in at $30.7 billion, or $2.10 per share, for the three months ended Sept. 26.

Speaking on a conference call with analysts, Ternus highlighted the company's expanding product lineup, including the all-important iPhone business, whose revenue grew 17% to $57.58 billion.

Strong guidance, softer margin outlook

Apple said it expects overall revenue to grow between 7% and 10% year-over-year in the current holiday quarter, seasonally its strongest period of the year. The forecast implies a range of $153.8 billion to $158.2 billion, compared with the $153.2 billion analysts had been expecting.

The outlook for profit margins, however, appeared to leave investors cold. Shares of the $4.9 trillion company fell as much as 4% in after-hours trading on Monday before recovering some ground to trade down 2.7%.

Investors have been closely tracking the impact of rising memory chip prices on Apple and how the trend will weigh on its profit margins. Memory chips sit inside essentially every product the company sells, from iPhones and iPads to Macs, which is why the cost curve carries outsized weight for a hardware-driven business. To help offset what Ternus described on Monday's call as an "unprecedented" situation in the memory market, Apple has raised prices across its product line.

The company's gross margin came in at 47.9% for the recently ended quarter, landing near the high end of its forecast range and above the 47.2% gross margin posted in the year-ago period. Chief Financial Officer Kevan Parekh, however, noted that tariff refunds lifted the gross margin by roughly one percentage point; without them, it would have been lower.

For the current holiday quarter, Apple said it expects gross margins to decline to between 45% and 46%, citing rising memory costs and expenses associated with ramping up its Siri AI service. That guided range will be among the most closely watched numbers when Apple reports its holiday-quarter results, alongside whether demand holds up at the company's higher price points during its busiest selling season.

A busy debut for Ternus

Ternus has marked his first couple of months at Apple with a series of product releases that have showcased the company's latest innovations and eased his transition into the role. Those include the September launch of the foldable iPhone Duo, a wave of new home products, and last week's unveiling of Apple's first touchscreen MacBook Pro.

In a written statement, Ternus said iPhone revenue reached a September-quarter record and Services posted an all-time high, "capping off our best fiscal year ever."

"We're closing the year with our most ambitious lineup yet," he said. "Together with the all-new Siri AI, it's an incredible lineup to carry us into the holiday season."

Apple's Services revenue, which includes iCloud, the App Store, and other offerings, rose roughly 10% year-over-year to $31.57 billion. Sales in the company's iPad business and its wearables business both declined.

Big Tech backdrop

Apple's results followed financial reports from its Big Tech peers, with Meta, Microsoft, Google, and Amazon all revealing their latest earnings over the last two weeks. While those companies generally posted positive results, shares in the Nasdaq Composite have sunk in recent days as investors weigh the sector's strong growth—especially cloud-computing demand for AI services—against the hundreds of billions of dollars Microsoft, Amazon, and others are spending on AI infrastructure. Apple's own guidance shows AI investments reaching its cost structure as well, with Siri ramp expenses cited directly as a holiday-quarter margin headwind.

This story was originally featured on Fortune.com.