Apple’s shares declined following Jefferies’ downgrade amid supply chain bottlenecks in memory chips, raising concerns over the company’s ability to meet demand for the upcoming iPhone 18 Pro amidst rising AI-driven component costs.
Apple fell again on Tuesday after Jefferies downgraded the stock, adding to a weaker start to the week as investors reassessed how much more the company can deliver in the near term. Edison Lee cut the shares to Underperform from Hold and reduced his target to about $264 from $286, a call that suggested not that Apple’s business is deteriorating, but that expectations may be running ahead of execution.
The move came as pressure builds across the technology supply chain, especially in memory chips. According to Axios, AI demand is pushing up DRAM and other memory prices after years of declines, a reversal that is feeding through to smartphones, laptops and cloud services. Apple has also been testing memory from China’s CXMT as it looks for ways to limit costs, while major rivals such as Meta, Microsoft and Alphabet have been locking in long-term supply.
That matters because Apple is already dealing with a more demanding production picture. Reports from Tom’s Hardware and TechRadar said the company has faced a bottleneck around the iPhone 18 Pro, with about $1 billion of chips waiting to be packaged because DRAM is not readily available. The problem is linked to Apple’s shift to a new packaging method for its latest silicon, which requires memory to be available earlier in the process. The reports said Apple still expects to meet launch demand, but tighter inventories and longer delivery times may follow.
The broader backdrop is that Apple remains a highly profitable company even as its valuation leaves less room for disappointment. In the June quarter, revenue reached a record $109.4 billion, diluted earnings rose 29% to $2.02 a share and gross margin held at 50.1%, according to the company’s results. But Tim Cook has acknowledged that rising memory and RAM costs, driven by the AI build-out, have become difficult to absorb. That leaves Apple facing a familiar test: premium pricing, services growth and a huge installed base can soften the blow, but they may not be enough if component inflation and AI execution continue to outpace the company’s response.
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