Apple stock gets slammed on bigger Mac, iPad price hikes. Why it can weather the storm
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CNBC Finance
5 min read
Apple shares took a big hit Thursday after the company announced bigger-than-expected price hikes on its MacBooks and iPads. It's a bump in the road â but one that the tech giant is well-equipped to handle. The stock had its worst single session in more than a year, falling more than 6%, as management made its first official move to pass higher memory costs onto consumers since outgoing CEO Tim Cook said that price increases were "unavoidable" last week. Price changes on iPhones are expected, but not before the annual fall launch event. Still, no tech company is in a better spot to navigate these increases. Apple's massive scale and strong relationships with memory suppliers give it an edge over rivals. "I would think their peers would need to raise prices as well, probably even more than Apple because they just don't have the bargaining power to negotiate input prices as Apple has," Jeff Marks, director of Club portfolio analysis, said Thursday. Despite Cook's recent warning, investors sold the stock on concerns about a sales slowdown. "[The] market is worried about the potential demand destruction that could come as a result of these higher prices," Jeff added. The price increases ranged from over 17% to 25% across Macs, iPads, and home devices. D.A. Davidson's Gil Luria described the price increases as quite substantial and "beyond the increased cost of memory." In personal computers, Apple raised the MacBook Air 512GB to $1,299 from $1,099, the MacBook Pro 1T to $1,999 from $1,699, and the starting price for the MacBook Neo to $699 from $599. Other consumer electronics like the iPad Air 128GB went to $749 from $599, while the iPad Pro Wifi 256GB jumped to $1,199 from $999. "It looks like this is a very broad price increase," Luria said. He agreed with Jeff, adding that it's "hard to see how that wouldn't impact demand somewhat." Apple is not alone. Microsoft announced on Thursday that prices are increasing on its Xbox game consoles, also citing higher memory costs. Club stock Microsoft fell more than 3.5% on the news, hitting a 52-week low. Adding to the concern, memory giant Micron Technology reported a monster quarter. The company also said it expects tight conditions to persist beyond calendar year 2027, and it is not sure when that will change. Micron shares soared 15.8% on Thursday. Other memory and storage companies, such as Sandisk and Western Digital , were also up big. Surging prices have required Apple and other tech companies to take action, or risk hits to profit margins. The capacity to produce memory and storage is being taken up by hyperscalers, who require data center-grade chips to support energy-intensive AI workloads. That means less availability for components in the consumer electronics industry. As a result, prices for memory and storage have quadrupled over the past three quarters, according to Counterpoint Research data. Going forward, Apple has distinct advantages over its rivals. The first is the sheer size of the company. Suppliers like TSMC prefer Apple's predictable annual hardware cycles over gambling production capacity on smaller tech firms with more erratic orders. That gives Apple better pricing and first dibs on components. Second, Apple has strong profit margins that give the company a financial cushion to absorb costs more easily than peers. Beyond that, the iPhone maker also has great relationships with memory suppliers. Management can lock in long-term memory contracts in advance, allowing Apple to secure lower rates before the market skyrockets. Bottom line Not only is Apple in a solid position to navigate the memory shortage, but the stock also has its own tailwinds that can help offset pressure down the road. Most notably, Apple's AI roadmap is looking more promising following a lackluster rollout that weighed on the stock throughout 2025. Things have really turned around in 2026. In January, Apple announced a multiyear partnership with Alphabet to have Google's Gemini power its artificial intelligence features. Apple is expected to pay roughly $1 billion annually, but it pales in comparison to what Google pays Apple for search priority. Apple also gets to sidestep all the billions of dollars that other tech behemoths have poured into the AI infrastructure buildout. "This is a great opportunity to realize that they happen to get the premier AI by dealing with Gemini," Jim said around the time of the Alphabet deal . We saw that in action six months later at its annual developers conference, when Apple unveiled a souped-up, more conversational Siri powered by Gemini. The new-and-improved Siri should be out later this year, another selling point going into the next iPhone upgrade cycle following a year of strong iPhone 17 sales. "Look, we're just being patient," Jeff said. "Obviously, Apple has been an 'own it, don't trade it' for so long." We have a hold-equivalent 2 rating on the stock and a $300 price target. With shares around $275, our PT implies 9% upside. Apple closed at a record high of $315 on June 2. (Jim Cramer's Charitable Trust is long AAPL, MSFT, GOOGL. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. 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