Apple shares fall as analysts flag memory costs, supply pressures ahead

Apple shares fall as analysts flag memory costs, supply pressures ahead

Apple Inc (NASDAQ:AAPL, XETRA:APC) shares fell nearly 10% following its latest earnings report as analysts highlighted supply constraints, rising memory costs and a more challenging margin outlook heading into fiscal 2027.

UBS wrote that Apple delivered an “in-line quarter” with solid iPhone demand but weaker-than-expected Services growth. The firm noted that investor expectations could face pressure after Apple’s shares gained around 15% in July, while broader technology stocks declined.

“Although Apple’s cash flow is less impacted by AI-related capex than Mag 7 peers, its lack of a robust AI strategy remains a challenge in our view,” UBS wrote. The firm maintained a ‘Neutral’ rating and a $296 price target, citing limited upside to estimates and an elevated valuation.

Apple reported fiscal third quarter iPhone revenue of $54.3 billion, up 22% year over year and ahead of UBS’ $53.3 billion estimate, supported by strong demand for the iPhone 17 lineup and improved component availability. However, Services revenue of $30.7 billion, up 12% year over year, came in below UBS’ $31.4 billion forecast.

UBS highlighted that gross margin excluding tariff refunds was 48.1%, broadly in line with expectations, but warned that higher memory costs and increasing component expenses could weigh on profitability in coming quarters.

The firm wrote that supply constraints are expected to “increase significantly sequentially,” affecting iPhone, Mac and iPad production. The firm added that Apple’s September quarter outlook points to slowing iPhone growth, with revenue growth expected to decelerate despite strong recent demand. UBS expects gross margins to face f...