Apple Inc. (NASDAQ:AAPL) shares advanced 1.5% to close at $310.03 on Tuesday, buoyed by strong quarterly iPhone sales and speculation about a significant price increase for the upcoming iPhone 18 Pro Max. The stock's gain came as investors weighed the potential impact of a $200 price hike on consumer demand and the company's profitability.
According to a report from MacRumors, citing IDC estimates, the iPhone 18 Pro Max could start at $1,399, a 16.7% increase from the current iPhone 17 Pro Max entry price of $1,199. While Apple has not confirmed the model, pricing, or launch date, the scenario has become a focal point for investors. A $1,399 starting price would represent a significant test of pricing power, especially amid rising component costs and supply chain challenges.
The company's fiscal third-quarter results, reported earlier this month, showed iPhone revenue climbed 21.7% year-over-year to a June-quarter record of $54.25 billion, accounting for 49.6% of Apple's total revenue of $109.42 billion. Other product lines also performed well, with Mac sales surging 28.7% and services revenue up 12.1%. Only iPad revenue declined, falling 5.9%.
However, margins remain a key concern. Apple reported a gross margin of 50.1% for the quarter, but that included about two percentage points from tariff refunds. The underlying margin was approximately 48.1%. Management has forecast a September-quarter margin of 47% to 48%, below the current level, reflecting cost pressures and potential pricing changes.
CEO Tim Cook noted in an interview with Reuters that the supply chain had "less flexibility" amid strong demand, indicating that the company may need to pass on higher costs to consumers. A $200 price increase on the Pro Max would help protect profit per device but could dampen unit sales, particularly if economic conditions remain challenging.
Wall Street remains largely positive on Apple, but conviction has softened. The number of bullish ratings has fallen to 30 from 34 three months ago, while bearish calls have risen to five from three. The average price target stands at $334.23, implying about 7.8% upside from Tuesday's close. Targets range from $245 to $400, reflecting a wide divergence in views on Apple's growth prospects and margin trajectory.
Recent analyst actions highlight the split. Citi maintained a Buy rating and raised its target to $365, citing the upcoming launch as a catalyst. In contrast, Jefferies downgraded Apple to Underperform with a $263.66 target, citing concerns about product differentiation and rising costs.
Investors are now awaiting Apple's official event announcement, which will confirm the product lineup, pricing, and launch date. A $1,399 Pro Max would turn the margin debate into a live demand test, with potential implications for the broader smartphone market. Until then, the stock is likely to remain range-bound as the market digests the conflicting signals.
