Apple shares jumped 3.6 per cent in early trading on Friday (May 1) after the iPhone maker posted its strongest quarterly sales growth in more than four years, a show of momentum as it prepares to hand over the reins to a new CEO.
Its latest iPhone 17 Pro series and the newly launched low-cost MacBook Neo laptop are both drawing buyers at a time of low overall demand in the consumer electronics industry due to price hikes forced by the memory chip shortage.
Even though Apple‘s margins for the January-March quarter and its fiscal third-quarter forecast were above Wall Street estimates, outgoing CEO Tim Cook warned that higher memory costs would increasingly weigh on the business from June.
Limited supply of the advanced processors for iPhone have already hampered Apple‘s ability to capitalise on strong demand. The chips are made by Taiwan’s TSMC 2330.TW, the leading producer of AI processors.
Analysts say Apple‘s clout with long-time suppliers could position it better than rivals in securing memory chips but it might have to raise prices later this year.
“The key question will be deciding the perfect balance strategically between increasing prices and maintaining profitability or focusing on gaining share by not increasing prices,” said Nabila Popal, a senior research director at IDC.
“I think Apple will increase prices of the Pro and ProMax in upcoming fall launch, however even if they don’t, with the super high-end iPhone fold coming up – which we expect to be well over US$2200 – will help balance some of the increased costs.”
At least 13 brokerages raised their price targets on Apple following the results. If gains hold, Apple is on track to add around US$143 billion in its market value of US$3.983 trillion.
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