Apple price hikes risk slowing upgrade cycles
The bear case argued for Apple is that rising memory and storage chip costs will force price hikes on devices, potentially prompting consumers to delay upgrades and hurting the company's bottom line.
The argument
WSJ reporter Rolf Winkler argued that a projected $200 price increase for the iPhone 18 Pro to maintain Apple's margins could lead consumers to keep their current phones longer. This margin pressure is driven by surging chip costs fueled by the AI data center build-out.
The thesis, stress-tested
✓ What validates it
- ✓Apple reports lower-than-expected iPhone unit sales following the next launch
- ✓Average selling price (ASP) increases but total revenue declines
▸ Risks discussed
- ▸Consumers may accept the higher prices due to brand loyalty or new AI features
- ▸Component costs could decline sooner than expected
Hear it yourself
"that the Fed operates, including how it communicates with the public, how it handles economic data, a whole host of things that seem to be at the top of Warsh's list of priorities. What does that mean for investors? I mean, can we expect more market volatility as investors are flying a little bit more blind? Under Chair Powell, by the time a Fed meeting rolled around, markets had a pretty good idea about what the Fed was likely to do. It wasn't likely that the Fed was going to raise rates without having signaled that beforehand."
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