Apple (AAPL) BofA Stays Bullish as Price Increases Could Offset Higher Memory Costs

Apple (NASDAQ:AAPL) is one of the 15 AI Stocks Analysts Are Watching: Microsoft, Nvidia, and More.

Recently, CEO Tim Cook confirmed that Apple Inc. is raising prices to offset rising memory costs. In response, on June 18, BofA Securities analyst Wamsi Mohan reiterated a Buy rating on the stock with a $380.00 price target. The firm believes that Apple may be able to protect its earnings this way even as memory costs rise.

The firm wrote in its investor note how a price raise was already anticipated, reflecting about $100 price increase in its prior estimates. However, CEO Cook confirming the cost pressure and due to the continued raise in memory costs, the firm believes Apple may further raise pricing by an additional $100 on the Pro and Pro-Max models.

The base iPhone model is expected to remain unchanged. The firm believes that the idea is that buyers’ of premium Apple products may be less sensitive to price changes.

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Apple may also likely raise prices for iPads and Macs, the firm noted.

We think there could be an additional 100bps of gross margin headwinds in products but expect services margins to remain stable with some potential upside to be a potential offset. We also expect Apple to offset some of the component price increases by additional offsets in other areas of the bill of materials. We also see some potential offsets from recycled/recovered materials, lowering overhead and other supply chain efficiencies.

Apple is a technology company known for its consumer electronics, software, and services.

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