Apple’s Shape Shift: Jefferies Downgrades Amidst iPhone Uncertainty
Apple has seemingly run out of iPhone shapes, leading to a recent downgrade from Jefferies, who cut its rating from hold to underperform. This move, equivalent to a sell rating, also lowered the price target from $285.56 to $263.66.
Jefferies’ concerns center around three key factors:
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Cancelled All-Glass iPhone: The bank cites Apple’s cancellation of a rumored all-glass iPhone as a significant indicator, stating that introducing new designs to drive higher average selling prices (ASP) is more challenging than expected.
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Soaring Memory Prices: Increasing memory costs are expected to significantly impact the foldable iPhone, set for release next month. Jefferies estimates prices as high as $3,099 for a 2TB model, reflecting a substantial markup over traditional smartphones.
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AI Delays: The report questions Apple’s progress on AI, arguing it could be a significant margin driver in the future.
Memory Crunch:
The global memory chip market is dominated by a small group of manufacturers: Micron, SK Hynix, and Samsung. This concentration has led to rising prices, impacting not only Apple but also other tech giants.
A Changing Landscape?
Some observers argue that Apple’s loss of control over its supply chain, specifically in the area of memory chips, weakens its position. CNBC counters that a downgrade doesn’t necessarily mean selling pressure, while Apple itself maintains confidence in its on-device AI approach.
Looking Ahead:
John Ternus takes over as CEO next month, facing the challenge of restoring margin growth and introducing compelling new products, including the highly anticipated foldable iPhone.