Apple stock gets slammed on bigger Mac, iPad price hikes. Why it can weather the storm
Apple shares took a big hit Thursday after the company announced larger-than-expected price increases for its MacBooks and iPads. It’s a bump in the road, but one that the tech giant is well-equipped to handle. The stock had its worst single session in more than a year, falling more than 6% as management made its first official move to pass on higher memory costs to consumers after CEO Tim Cook last week said price increases were “inevitable.” Price changes for iPhones are expected, but not before the annual fall launch event. Still, no tech company is in a better spot to navigate these increases. Apple’s massive scale and strong relationships with memory suppliers give it an edge over its competitors. “I think its peers need to raise prices as well, probably even more than Apple, because they don’t have the bargaining power that Apple has on input prices,” Jeff Marks, Club’s director of portfolio analysis, said Thursday. Despite Cook’s latest warning, investors sold stocks due to concerns that sales would slow. “[The] Jeff added: Price increases ranged from 17% to 25% on Macs, iPads and home devices. District Attorney Gil Luria of Davidson called the price increases quite significant and “beyond the increased cost of memory.” In personal computers, Apple has priced the MacBook Air 512GB from $1,099 to $1,299, and the MacBook Pro 1T from $1,099 to $1,299. Luria agreed with Jeff, saying, “This seems like a very large price increase,” and the starting price of the MacBook Neo increased from $599 to $699. Other consumer electronics products, such as the iPad Air 128GB, rose from $599 to $749. Apple is not alone. Microsoft announced price hikes on Xbox gaming consoles on Thursday, also citing higher memory costs. Microsoft’s club shares fell more than 3.5% on the news, falling to a 52-week low. Adding to the concerns, memory giant Micron Technology reported a monster quarter. The company also said it expects stringent conditions to continue beyond calendar year 2027 and is unsure when that will change. Micron shares rose 15.8% on Thursday. Other memories Rising prices have forced Apple and other tech companies to take action or risk hurting profit margins. Memory and storage capacity are used by those who need data center-level chips to support energy-intensive AI workloads. As a result, memory and storage prices have quadrupled over the past three quarters, according to Counterpoint Research data. The first is the size of the company. Suppliers like TSMC prefer gambling production capacity at smaller tech companies with more irregular orders. Second, Apple has a strong profit margin, allowing the company to cover costs more easily than its peers. As a result, not only is Apple in a solid position to overcome the memory shortage, but the stock also has its own headwinds that could help offset the pressure ahead. Most importantly, Apple’s AI roadmap looks more promising after a weak rollout that weighed on the stock through 2025. In 2026, things really turned around. In January, Apple announced a multi-year partnership with Alphabet for Google’s Gemini to power Apple’s AI features. It’s expected to pay roughly $1 billion annually, but that pales in comparison to what Google pays Apple for search priority. Apple is also avoiding the billions of dollars other tech giants are spending on building out AI infrastructure: “This is a great opportunity to realize that by signing with Gemini, they’re getting world-class AI,” Jim said around the time of the Alphabet deal, which we saw Apple announce in even more amplified form six months later at its annual developers conference. Conversational Siri powered by Gemini, coming later this year, is another selling point heading into the next iPhone upgrade cycle following a year of strong iPhone 17 sales. “Frankly, Apple has been ‘own, don’t trade’ for too long,” Jeff said. PT closed at a record high of $315 on June 2. (Jim Cramer’s Charitable Trust is long AAPL, MSFT, GOOGL. See here for a full list of stocks.) When you subscribe to the CNBC Investment Club with Jim Cramer, after Jim sends a trade alert, he waits 45 minutes before buying or selling a stock in his charitable trust. If Jim talked about a stock on CNBC TV, he waits 72 hours after issuing the trading alert before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION, TOGETHER WITH OUR TERMS AND CONDITIONS AND PRIVACY POLICY, DOES NOT EXIST OR CREATE ANY OBLIGATIONS OR DUTIES OF CONFIDENTIALITY. NO PARTICULAR RESULT OR PROFIT CAN BE GUARANTEED FROM RECEIVING ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB.
