Amid investor concerns over rising hardware costs, Apple (AAPL) shares have declined for eight consecutive weeks.
At the close of U.S. markets on Friday, Apple’s stock edged down 0.12%, bringing its weekly loss to nearly 4%. This marks its longest losing streak since May 2022.
(Apple stock price has dropped to levels last seen in mid-October)
Apple’s share price has retreated approximately 13.8% from its 52-week high of $288 set in December last year to around $248 currently. Furthermore, compared to the other members of the “Magnificent Seven” tech giants, Apple has seen particularly significant capital outflows since July.
(Net capital inflow trends for the Magnificent Seven)
The core trigger for this sell-off pressure originates from supply chain warnings. Recent pessimistic guidance from chip giant Intel sparked market fears regarding skyrocketing costs for storage components. Due to a surge in demand for AI hardware, memory chip prices are undergoing a sharp increase, leading to widespread concern that this will severely erode the gross margins of consumer electronics giants, including Apple.
However, despite the subdued market sentiment, Wall Street Insights notes that Goldman Sachs has maintained its “Buy” rating on Apple. The firm suggests that investors should ignore short-term noise and “buy the dip” ahead of the company’s fiscal 2026 first-quarter earnings report on January 29.
Goldman Sachs believes that a robust iPhone replacement cycle and the implementation of AI features will bolster performance beyond expectations.
Surging Storage Costs Spark Margin Fears
The market’s pessimistic outlook on Apple’s recent performance is primarily driven by the rapid rise in memory chip prices.
According to Wall Street Insights, Intel CFO David Zinsner admitted after the earnings release that while the company has secured supply for the first half of the year, storage pricing could become a challenge in the second half.
Data from Counterpoint Research has further fueled these concerns, forecasting that storage component costs will surge by 40% to 50% this quarter—driven by AI hardware demand—following a similar spike in the fourth quarter of 2025.
This trend poses a direct threat to Apple. IDC research indicates that storage components account for approximately 10% to 15% of the total Bill of Materials (BOM) for high-end smartphones like the iPhone. Benchmark analyst Cody Acree noted:
“Rising component costs, particularly those related to memory prices, could have unknown negative impacts on shipment volumes and revenue potential.”
Additionally, as memory manufacturers such as Micron(MU) and SanDisk(SAND) shift capacity toward more lucrative AI data center components, supply for traditional DRAM and NAND used in smartphones and PCs has tightened.
UBS analyst David Vogt warned in a report that while Apple’s supply agreements might mitigate the impact in the March quarter, risks will significantly increase in the June and September quarters as production for the next-generation iPhone ramps up.
Vogt estimates that memory chip shortages could hit Apple’s gross margin by 50 to 100 basis points. Based on this, UBS maintains a “Neutral” rating on Apple with a price target of $280.
Goldman Sachs’ View: Retracement is a Buying Opportunity
Despite inflationary pressures on the cost side, Goldman Sachs analyst Michael Ng argues that now is the optimal time to buy Apple stock.
Goldman has set a price target of $320 for Apple and expects the company to deliver an outstanding performance in the upcoming earnings report.
The firm forecasts that Apple’s revenue for the first quarter of fiscal 2026 will reach $137.4 billion, an 11% year-over-year increase. The iPhone business is expected to be the primary growth engine, with revenue projected to rise 13% year-over-year to $78 billion. This growth is driven by two main factors:
- Volume Growth: A projected 5% year-over-year increase in shipments, notably bolstered by a 26% surge in shipments in China, reflecting a strong recovery in a key market.
- Average Selling Price (ASP): An 8% year-over-year increase, indicating robust demand for high-end models.
Furthermore, Goldman Sachs emphasized the support for the stock price from the future product pipeline. The report noted that with demand for the iPhone 17 series expected to outperform its predecessor, and the anticipated launch of a foldable iPhone (iPhone Fold), Apple is shifting toward a “two-updates-per-year” release cycle.
Combined with upgrades to iOS and Siri, as well as the partnership with Google Gemini, the iPhone’s position as the preferred hardware gateway for the AI era will be further consolidated, thereby extending the upgrade super-cycle.
Wall Street Consensus and Valuation Outlook
From a valuation perspective, Apple currently trades at a forward P/E ratio of approximately 30x. While slightly above the industry average, analysts generally consider this premium justified given the stability of its earnings growth.
Goldman Sachs expects Apple’s first-quarter earnings per share (EPS) to reach $2.66, consistent with market consensus, while maintaining a steady gross margin of 47.7%.
Overall, Wall Street remains bullish on Apple. Out of 42 analysts covering the stock, 21 give it a “Strong Buy” rating. Evercore ISI reaffirmed an “Outperform” rating and a $330 price target, projecting a 17% year-over-year increase in iPhone sales.
Wedbush analyst Dan Ives provided a street-high price target of $350, describing 2026 as a “milestone year” for the full deployment of Apple’s AI strategic roadmap.
As the January 29 earnings date approaches, the market is waiting with bated breath to see if Apple can reshape its growth narrative through strong AI terminal demand, even under the shadow of rising storage costs.