Apple's Gross Margin Faces Pressure from Rising Memory Costs
Apple (AAPL) is experiencing declining gross margins due to rising memory prices, despite strong sales of iPhones and Macs in the June quarter. Management attributes this margin compression primarily to higher costs for memory components rather than supply chain constraints or other factors. The company's reported gross margin fell by 120 basis points when excluding tariff refunds, with further declines expected in the September quarter as memory prices continue rising. Apple has raised product pricing on Macs and iPads to offset some of these cost increases but remains cautious about consumer response. Management warns that supply constraints will likely impact sales more significantly in the upcoming quarter, while the inventory cushion is running thin. The company's stock currently trades at a high price-to-earnings multiple near its 10-year peak, which may be vulnerable if margins continue to fall. Investors are watching closely whether Apple can maintain gross margin guidance of between 47% and 48%, including the benefit from tariff refunds. The market is also assessing how consumers will react to higher prices on key products.
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