Apple Inc. (NASDAQ:AAPL) remains in the spotlight after launching its iPhone 18 Pro lineup and its first foldable phone, the iPhone Duo, amid reports that it asked suppliers to cut component orders. The stock ranks first on our list of the top 10 stocks Jim Cramer and billionaire Ken Fisher like. Higher prices and soft early demand are weighing on sentiment, so we looked at what could drive the stock from here and what could hold it back.
An Ecosystem With Room to Grow
Apple has a built-in advantage in the products it launches next, because it sells to a very large base of customers who already use its devices. Parks Associates reports that 62% of US internet households own at least one Apple device, but only about 25% own three or more. That gap leaves room to sell more devices to the same homes. Apple’s new HomeView, a $299 home display for smart-home control, calls, music and video, targets exactly this. It works with Apple’s other devices, so each new product gives Apple another reason for a household to stay in its ecosystem.
AI could add a second driver. Gene Munster of Deepwater Asset Management said on CNBC that a large upgrade cycle in consumer hardware could begin in mid to late 2027 and last several years, because AI that runs on the device itself favors Apple. Click to read his full case. The London Company Income Equity Strategy made a similar point in its investor letter. It said Apple’s ecosystem, pricing power and capital discipline remain intact despite worries about memory costs. Check the full letter here.
Memory Costs and Softer Demand
Apple faces a cost problem and a demand problem at the same time. Memory chip prices have surged as AI data centers absorb supply, and Tim Cook called it “a 100-year flood” in memory pricing. Apple raised US prices on the iPhone 18 Pro and Pro Max by $100 and raised iPad and MacBook prices earlier this year. Analysts expect margins to shrink next year. The consumer is under pressure as well, since the University of Michigan’s sentiment index fell to a record low in early October.
Early demand signs look soft. Reuters reported, citing Nikkei Asia, that Apple told some suppliers to lower production of components for the new Pro models. Bank of America and JPMorgan found shorter pre-order waiting times than last year, and Loop Capital downgraded the stock on iPhone shipment concerns. See what the demand data shows. Apple’s higher prices may protect revenue, but fewer buyers would hurt the volume that drives its services business.
A Premium Price Tag
Apple trades at about 38.4 times forward earnings. The typical stock in its sector trades at about 21.5 times, so Apple carries a premium of about 79%. The stock also sits about 30% above its own five-year average of 29.7 times. The forward PEG ratio, which compares the P/E to expected growth, is 3.46 against a sector median of 1.16. That means Apple costs much more per point of growth than the typical stock in its sector. Analysts expect revenue to grow about 10% in 2027 but earnings per share to grow only about 8%, because higher memory costs squeeze margins. Wall Street’s consensus rating is Buy, and a quant score rates the stock Hold. Apple Inc. is a strong business, and the price already reflects it.
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