Apple CEO sends blunt message iPhone 18 fans can’t ignore

Apple (AAPL) posted different blowout quarter, but CEO Tim Cook utilized that infinitesimal to softly reset expectations.

After celebrating different almighty quarter, Cook issued a informing for iPhone 18 fans, arsenic proviso tightens, constituent costs rise, and Apple’s proviso concatenation is losing immoderate of its never-ending cushion.

On the aboveground of it, things look arsenic pristine arsenic ever for the Cupertino giant. However, beneath each the flashy headlines, Cook points to a institution that’s fundamentally successful “supply pursuit mode,” tackling precocious spot constraints and representation prices that are relentlessly rising.

Memory marketplace giants including Micron have been scrambling to physique multi-billion-dollar caller fabs to code the ongoing shortage, a concern that’s improbable to close for the adjacent fewer years.

Consequently, representation players specified arsenic SanDisk are enjoying grounds demand, with its banal up a jaw-dropping 1,230% successful the past six months.

For iPhone 18 fans successful particular, this setup is mighty interesting.

When proviso is choky and costs emergence during a beardown cycle, Apple’s absorption is compelled to reassess however the adjacent iPhone is built and priced. Though Cook isn’t spelling it retired yet, the awesome is intelligibly there.

Apple’s Q1 results landed with a thud, spearheaded by grounds gross and EPS, a astonishment gross-margin boost, and stronger-than-expected iPhone request powering the beat.

• Sales/EPS: Revenue $143.8 billion (+16% twelvemonth implicit year); diluted EPS $2.84 (+19% twelvemonth implicit year); nett income $42.1 billion.

• Margins/Cash flow: Gross borderline 48.2% (above guidance); operating currency travel $53.9 billion (record).

• Segment sales: iPhone $85.3 billion (+23%); Services $30.0 billion (+14%); Mac $8.4 billion (-7%); iPad $8.6 billion (+6%); Wearables/Home/Accessories $11.5 billion (-2%).

• Outlook: March-quarter gross +13% to +16% twelvemonth implicit year; gross borderline 48% to 49%; operational expenditure $18.4 billion-$18.7 billion.

• Cash & liquidity: Ended 4th with $145.0 billion successful currency and marketable securities; $91.0 billion full debt; $54.0 billion nett cash.
  Source: Apple Inc., Investor Relations

Cook was unusually nonstop astir the pressures facing Apple connected the borderline side.

In responding to questions implicit proviso and components, helium painted a representation of request efficaciously outrunning Apple’s readying astatine this point.

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“We exited December with precise thin transmission inventory,” Cook said. “Based connected that, we are successful a proviso pursuit mode to conscionable the precise precocious levels of lawsuit demand.”

He argued that Apple is constrained astatine this point, and it’s hard to laic retired a timeline erstwhile proviso and request volition balance, fixed cardinal bottlenecks successful precocious spot nodes and constricted supply-chain flexibility.

On representation specifically, Cook was careful.

He went connected to admit that representation marketplace pricing is expected to emergence astatine a important pace.

However, erstwhile pressed astir Apple’s imaginable effect and whether it would usage pricing arsenic a lever, Cook said helium wouldn’t speculate connected that point yet.

Cook’s restraint shows that the decisions are inactive up successful the air, and the existent dynamics constituent to an equation that isn’t settled for the upcoming iPhone.

Nonetheless, successful the interim, I deliberation Cook’s presumption aligns with what TF International Securities expert Ming-Chi Kuo has said astir Apple absorbing higher costs for now.

Kuo, successful a station connected X, laid it retired clearly.

Wall Street’s presumption connected Apple remains upbeat aft its latest quarterly showing, with the mean expert price people sitting astatine $290.40 (roughly 11.92% supra existent levels).

• Bank of America: Reiterated a bargain standing and kept a $325 price target, 25.3% upside (current terms is $259.48).

• Goldman Sachs: $330, implying a 27.2% upside.

• JPMorgan Chase: $325, suggesting a 25.3% upside.

• Morgan Stanley: $315, pointing to a 21.4% upside.

• UBS: $280, implying a 7.9% upside.

It’s beauteous wide that the iPhone’s pricing doesn’t enactment similar emblematic user electronics pricing.

Though request hasn’t been perfectly inelastic, it has been remarkably sticky, compelling legendary investors similar Warren Buffett to accidental successful an interrogation that it’s “probably the champion concern I cognize successful the world.”

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Let's upwind our clocks backmost to 2017-2018, erstwhile Apple launched a $999 iPhone X. Many successful the tech punditry pointed to a request cliff, but that ne'er arrived.

For context, successful fiscal Q1 2018, Apple sold 77.3 cardinal iPhones, with iPhone income jumping a superb 13% to $61.6 billion, underscoring the iPhone's inelastic demand.

Apple is afloat alert of however pricing matters astatine the margin.

For example, successful 2019, it dropped the iPhone 11’s starting terms to $699, efficaciously widening the upgrade funnel without retreating to premium models. By repeating the aforesaid strategy successful 2020, erstwhile Apple bumped the iPhone 12’s terms to $799 portion besides introducing a caller $699 iPhone 12 mini, it protected entry-level demand.

Consumer surveys besides reenforce that tension.

A WalletHub survey showed that 59% of respondents consciousness inflationary pressures could hold a caller telephone purchase, portion 89% consciousness iPhones are overpriced. However, 26% felt that, contempt being overpriced, a caller iPhone is worthy going into debt.

• YTD: Apple -4.55% versus S&P 500+1.37%

• 1-year: Apple +9.21% versus S&P 500 +14.29%

• 3-year: Apple +81.45% versus S&P 500 +72.71%

• 5-year: Apple +96.64% versus S&P 500 +86.82%
  Source: Seeking Alpha

Related: Bank of America delivers sobering banal marketplace take

This communicative was primitively published by TheStreet connected Feb 1, 2026, wherever it archetypal appeared successful the Technology section. Add TheStreet arsenic a Preferred Source by clicking here.