An analyst recommended reducing the proportion of Apple shares in the portfolio due to rising memory prices
Stocks have fallen 8.5% over the past five days
Phillip Capital believes Apple is running out of memory stock purchased before the price increase / Photo: M21Perfect / Shutterstock.com
Apple's profitability will come under pressure due to rising memory chip prices, according to Singapore-based financial group Phillip Capital. It downgraded its recommendation on the iPhone maker’s stock from “neutral” to “Reduce,” while maintaining its price target at $290, CNBC reports. This implies a 6% decline from Tuesday’s, August 4, closing price.
Although demand for products such as the iPhone 17 and MacBook remains strong, the positive impact of that demand will be undermined by a sharp rise in memory prices, according to Helena Wang, an analyst at Phillip Capital.
“Inflation in the memory segment is becoming a significant pressure on profitability. Management expects memory prices to continue rising in the fourth quarter of 2026 and beyond,” according to Wang’s note. — Apple has partially offset this effect through previously built-up inventory with lower cost of goods sold, a favorable sales mix, and reduced costs for non-memory components. However, these supportive factors are expected to weaken over time. The DRAM market is effectively controlled by just three suppliers, leaving Apple with little flexibility in its procurement.”
Wang also noted that Apple Intelligence, the company’s artificial intelligence platform, does not yet offer consumers clear incentives to upgrade their devices. In addition, regulatory hurdles in Europe and China—which account for 44% of Apple’s revenue—“may continue to limit the short-term monetization of Apple Intelligence,” the analyst believes.
Apple's stock fell nearly 10% following the release of its earnings report on July 30. Although the company beat analysts' expectations for earnings and revenue, it issued a weak outlook for the current period due to a global chip shortage. The tech giant has already raised prices on iPads and Mac models, and some analysts expect the iPhone to become more expensive in the near future, according to CNBC.
Nevertheless, Wall Street is optimistic about Apple shares: 33 out of 51 analysts covering the stock recommend buying it, according to MarketWatch. Another 13 recommend holding the stock, and only five recommend selling. Wall Street’s consensus price target is $328, which is 6% higher than the closing price on August 4.
This article was AI-translated and verified by a human editor
