Can Apple's New Boss Deliver a Blockbuster Product Launch?

All eyes in the tech world turn to Cupertino next week, when Apple Inc. NASDAQ: AAPL throws open the doors on its most closely watched product launch in years. It's a big moment for the company, and an even bigger one for the man now in charge, John Ternus, who has already told staff to expect something "phenomenal." Apple shares have rallied nearly 10% from the low they set after last month's earnings, and now trade around $325, marching back towards the all-time high they set in July. That momentum shows every sign of continuing as anticipation builds ahead of the launch. The biggest short-term question is whether the launch can live up to the hype. With potentially game-changing updates on the cards, next week could set the tone for Apple's stock for months to come.

The headline act is widely expected to be Apple's first-ever foldable iPhone, the boldest reinvention of the company's most important product in years. Alongside it will come the usual refresh of premium iPhones, but the foldable is what has investors most excited. The reason is the sheer scale of the opportunity. Some analysts expect Apple could ship more than 17 million foldable units by 2027, capturing roughly 40% of the global market for such devices. With a price tag expected to exceed $2,500, that could mean more than $45 billion in revenue for Apple, a not-insubstantial bump to target going into next year.

Yet for all the excitement, serious headwinds are rising costs. The price of memory chips has soared, driven by insatiable demand from AI data centers, and that inflation is landing squarely on Apple's newest devices. By one estimate, the bill of materials for the latest Pro iPhone could be almost 40% higher than a year earlier. That leaves Apple with an awkward balancing act: either pass those costs on to consumers through heftier price tags, accept slimmer margins, or some uncomfortable combination of the two. With the new iPhone already tipped to cost around $200 more than its predecessor, it looks like the company is leaning towards the first option. The risk, as the skeptics rightly point out, is that higher prices eventually dampen demand. At some stage, customers will start to balk at the steeper cost, unit sales will slow, and with them the growth of Apple's prized services business, which feeds off the size of its active user base. That’s the real tension at play as we head into next week and beyond.

Given those competing forces, it's little wonder that analyst opinion on Apple is so split. On the bullish side, Rothschild and other firms lead the pack with a $400 price target, implying more than 20% upside from current...