Apple Faces Margin Challenges Post-iPhone 18 Launch
Following the launch of the iPhone 18 Pro and Pro Max, Bank of America analyst Wamsi Mohan cut Apple’s price target from $380 to $370, citing that the new devices are not priced as high as expected. The iPhone Pro starts at $1,199 and the Pro Max at $1,299, both $100 higher than their predecessors, but lower than Mohan’s projections. Amid rising memory costs, Apple anticipates fourth-quarter gross margins to fall between 47% and 48%, down from 50% in the previous quarter.
Despite these challenges, Apple has a robust foundation with 2.5 billion active devices globally and over $39 billion in cash reserves. Analysts believe that the upcoming foldable iPhone Duo, starting at $1,999, could enhance margins if up to one-third of Pro Max owners transition to this new offering by 2027, potentially contributing 10% to total iPhone revenue.
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