Memory prices are spiking, and the smartphone market is feeling it. Citi analyst Atif Malik published a note Sunday warning that DRAM costs are set to surge — 50% in Q2 2026 and 100% in the second half of the year. That’s bad news for most hardware makers. For Apple, it’s a bit more complicated.
Citi trimmed its fiscal 2026 EPS estimate for Apple by $0.06 and its 2027 estimate by $0.04. The revisions reflect the expected margin hit from rising component costs. But the bank kept its Buy rating and $315 price target intact.
Apple stock was trading down around 0.7% at $255.81 Monday morning. The stock is already down about 5.3% year-to-date heading into this week.
Memory is not a small line item for Apple. It accounts for around 9% of iPhone costs and 15% of iPad and Mac costs, Citi noted. With DRAM prices moving as sharply as forecast, that adds up fast.
But Malik argues Apple is better equipped to handle the pressure than most.
“We believe Apple’s procurement team and purchasing strategies have improved over the years,” he wrote. “And Apple likely has the best negotiation power among all smartphone vendors.”
Citi estimates the memory spike will cause a 140 basis-point drag on Apple’s gross margins in 2026. That eases to 48 basis points in 2027 as DRAM prices are expected to stabilize. The 2028 outlook was left unchanged.
Smaller rivals with less purchasing leverage are likely to feel the pinch more. Citi believes that gap could actually help Apple pick up market share as competitors struggle to manage their cost structures.
Citi kept its iPhone shipment forecasts steady — 1.3% growth in 2026 to around 246 million units, and 5.9% growth in 2027 to around 262 million units.
Apple made a surprise move last week, launching two new products at notably lower price points. The iPhone 17e starts at $599, well below the $799 entry price of the standard iPhone 17. The MacBook Neo also starts at $599 — a 40% discount compared to the previous MacBook Air at $999.
Evercore ISI analyst Amit Daryanani pointed to those launches as evidence Apple is managing the inflation better than the market may be pricing in.
“We think investors are underappreciating how well AAPL is perhaps managing through the memory inflation issue,” Daryanani wrote. Evercore rates the stock Outperform with a $330 price target.
Malik also highlighted Apple’s ability to adjust pricing across its product lineup and tweak its bill of materials to offset cost headwinds. Apple has already raised prices on some MacBook models while holding iPhone prices steady in certain configurations.
The analyst noted Apple’s services business and AI roadmap as further support. An expected Siri upgrade powered by Google’s Gemini technology is due later this year. Apple’s installed base sits at roughly 2.5 billion active devices.
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