Apple Earnings Preview: A Beat, But Focus Will Be On Soaring Memory Prices

According to JPMorgan, Apple's print at 4:30pm ET today will largely be focused on investors looking for proof around the company's positioning to navigate the memory cycle-related cost headwinds, with investors already aware of the company’s position in securing supply to deliver better outcomes on revenue through share gains relative to other hardware OEMs, as well as the (potential) implications on strategic direction with the upcoming change in leadership following the recent announcement.

As Bloomberg reminds us, roughly 8% of the cost of materials for an iPhone is memory chips. For Apple Macs that’s more than 10%. What the company says about how it was able to cope with higher costs and what the landscape looks like now will have implications for chipmakers as well as the AI companies that compete with device-makers for supply. Microsoft and Meta on Wednesday cited higher memory and component costs as the main driver of their increased capex forecast. It’s partly self-inflicted. The data-center market has been hoovering up the world’s supply of memory chips, pushing up the price. Micron, in its most recent earnings call, said it expected the market to remain tight for the rest of this year, despite new supply (it’s not easy to build a clean room for chip manufacturing, so supply is inelastic). Then again, Micron mostly makes DRAM memory so one can see why it would have that view.