Apple Inc. (NASDAQ: AAPL) shares have advanced 4.7% since August 26, positioning the company for its upcoming product event with elevated expectations. The rally, which has pushed the stock to around $327, leaves little room for disappointment as the market awaits official pricing for the iPhone 18 lineup.
According to a report from TrendForce on Thursday, iPhone 18 prices could rise by 10% to 20%, driven by a sharp increase in memory costs. The research firm estimates that 256-gigabyte Pro memory costs are nearly 400% higher than last year. Apple has not confirmed these details, but the market's reaction has been muted, with shares trading down just 0.2% in premarket action on Friday.
The arithmetic behind a potential price hike is compelling. A 10% increase in price could offset a 9.1% decline in unit sales, while a 20% jump would allow for a 16.7% drop in units without impacting total revenue. However, these calculations are revenue-neutral boundaries, not forecasts, and they do not account for changes in product mix, currency fluctuations, or the impact on profit margins.
Apple's product gross margin stood at 40.1% in the June quarter, while services boasted a 75.6% margin. The price increase must not only cover higher component costs but also preserve the installed base that fuels the services segment. CEO Tim Cook called the quarter the company's strongest June quarter ever, citing double-digit growth across iPhone, Mac, and Services.
The iPhone remains the cornerstone of Apple's business, generating $54.25 billion in revenue in the fiscal third quarter, up 22% year-over-year, and representing nearly half of Apple's total revenue. A poorly received launch could have far-reaching implications, not just for hardware sales but for the entire ecosystem.
TrendForce also suggests that the fall launch may focus on Pro models and a new foldable device, with the standard iPhone 18 and other variants arriving in early 2027. This shift could reduce fall unit sales without necessarily indicating weak demand, while potentially boosting average selling prices.
Last year's experience offers a cautionary tale: when Apple raised the iPhone 17 Pro's starting price by $100, shares fell 1.5% on the day. The market's reaction to price changes is not always predictable, and the upcoming event will provide clarity.
As Apple prepares to unveil its latest devices on Wednesday at 10 a.m. PT, investors will be watching not only the official prices but also delivery times and the mix of Pro models sold, which will offer a clearer picture of demand. The company's ability to navigate the delicate balance between price and volume will be critical in maintaining its growth trajectory.
