Apple Inc. (AAPL) shares ended the shortened holiday week just below the $300 mark, buoyed by a broader tech rebound, as investors digest CEO Tim Cook's warning that product price increases are unavoidable due to surging memory chip costs linked to the artificial intelligence boom.
The stock closed Thursday at $298.01, up 0.7% on the day and 2.4% from its June 12 close of $291.13. U.S. markets were closed Friday for Juneteenth and remained shut over the weekend, setting the stage for Monday's reopening when investors will have their first chance to react to a flurry of news on Apple's pricing strategy, chip supply constraints, and an upcoming earnings report from memory chip maker Micron Technology (MU).
The broader market rallied Thursday, with the Nasdaq Composite climbing 1.91% and the S&P 500 gaining 1.08%. Semiconductors led the advance as traders found relief from falling oil prices and easing geopolitical tensions. For the week, the Nasdaq rose 2.43% and the S&P 500 added 0.93%, according to Reuters data.
Apple's latest catalyst came with a warning from CEO Tim Cook, who told the Wall Street Journal that raising product prices is unavoidable as the company faces higher costs for DRAM and high-bandwidth memory. DRAM is essential in phones and PCs, while high-bandwidth memory is critical for AI servers. Cook described the situation as unsustainable and indicated Apple could use its balance sheet to support supply, but he did not specify which products would see price increases or by how much.
Investors largely interpreted Cook's comments not as a sign of weakening demand but as pressure on Apple's margins—a challenge the company may manage as long as consumers continue to spend on iPhones, Macs, and iPads. Apple's strong position in the premium smartphone market provides some insulation; the company commands over two-thirds of sales for phones above $600 and more than 75% for devices over $1,000, according to the Wall Street Journal. This high-end focus means a price hike may have a different impact on Apple compared to competitors targeting the broader market.
Apple enters the week with substantial financial flexibility. The company reported fiscal Q2 revenue of $111.2 billion, up 17% year-over-year, with diluted earnings per share of $2.01, a 22% increase. The board authorized an additional $100 billion for share buybacks, giving Apple more leeway to support earnings per share if hardware costs rise.
This week, all eyes are on Micron Technology's fiscal Q3 earnings call scheduled for June 24 at 4:30 p.m. EDT. Investors will look for signs that AI-driven chip demand remains robust. Andy Pratt, director of investment strategy at Burney Company, told Reuters, “There’s still a lot of juice,” while Steve Kolano of Integrated Partners described demand relative to chip capacity as “through the roof.”
However, risks persist. If Apple raises prices too aggressively, consumers may delay upgrades. If it absorbs the costs, margins could compress. Melissa Weathers, an analyst at Deutsche Bank, expects DRAM shortages to continue into 2028 as AI-related demand diverts supply to data centers, a prolonged squeeze that may test Apple bulls' confidence.
For now, the market appears to believe Apple can weather the storm. The central question is not whether Apple can raise prices, but whether its customers will go along.
