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Jefferies cuts Apple to Underperform as memory costs squeeze margins
Jefferies also lowered its price target to $263.66, citing cancellation of an all-glass iPhone for September 2027 and added uncertainty around future iPhone pricing power.
Apple’s near-term pricing power is under scrutiny after Jefferies downgraded the stock, pointing to surging memory and storage costs that Tim Cook said Apple can no longer fully absorb. The investment firm warned the cost pressure could test Apple’s ability to protect margins without weakening demand.
On August 10, Jefferies cut Apple (AAPL) from Hold to Underperform and trimmed its price target to $263.66. The downgrade followed supply checks indicating Apple has cancelled an all-glass iPhone planned for September 2027 due to low yields, which Jefferies called a major product setback because the premium device could have helped lift average selling prices during a period of rising memory costs.
Jefferies said the cancellation may shift Apple’s path to higher iPhone average selling prices and margins toward the foldable iPhone and smaller incremental upgrades. The firm also flagged a demand-timing risk after Apple raised iPhone trade-in values in Europe and the US, arguing it could support iPhone 17 demand but potentially weigh on iPhone 18 sales.
The bearish note comes after Apple reported fiscal third-quarter results that conflicted with the concerns. Revenue rose 16% year-over-year to $109.42 billion and adjusted EPS was $1.91 versus $1.89 expected, with iPhone sales up 22%.