Tech Analyst Richard Windsor: Apple Gross Margins Under Pressure Due to Spot Market Siri Compute Purchases; Valuation Inferior to Nvidia
Independent tech analyst Richard Windsor, writing after Apple's FQ4 2026 earnings report, stated that Apple attributed its gross margin guidance reduction from 50% to 45%-46% to memory costs and higher compute expenses for the upgraded Siri. He speculated that this pressure stems from Apple purchasing compute capacity in the spot market at roughly twice the long-term contract price, a situation expected to ease as demand visibility improves and long-term agreements are signed. However, regarding valuation, he argued that Apple trades at 35.4x FY2027 P/E with only 6.3% growth, whereas Nvidia trades at under 15x FY2028 P/E with 70% EPS growth, making it 'no contest'.
Following Apple's release of its FQ4 2026 financial results, independent technology analyst Richard Windsor wrote on Radio Free Mobile: 'Apple struggles to justify its multiple.' His analysis goes beyond a simple earnings summary, focusing on a specific mechanistic hypothesis: why did Apple's gross margin guidance drop sharply from a high of 50% in June 2026 to 45%-46% for FQ1 2027?
Windsor noted that Apple cited memory costs and higher compute expenses associated with its upgraded Siri digital assistant as drivers of margin pressure. He further hypothesized a more specific procurement mechanism: Apple is likely buying compute capacity in the spot market because it remains uncertain about the total compute scale required for future Siri operations. This implies that Apple is currently paying approximately double the price it would incur if it had signed long-term agreements with standard cloud service providers.
The key implication of this hypothesis lies in the time dimension. Windsor assesses that once Apple gains better visibility into demand and can book long-term capacity, the exorbitant spot prices will normalize, and cost pressures will naturally subside. In other words, the compression in gross margins is an issue of procurement timing rather than structural deterioration.