Analyst: Apple's Memory Costs to Impact Margins

Key Issues Highlighted

Analyst Ming-Chi Kuo reports that Apple identified rising memory prices as a significant "cost pressure" during its recent earnings call. CEO Tim Cook confirmed this trend will have a greater impact on Q2 gross margins compared to the minimal effect seen in Q1.

Broader Market Context

Apple's distinction between a "cost pressure" for memory and a "supply constraint" for advanced nodes likely influenced a correction in non-AI memory stocks. Due to its strong bargaining power, consuming 20-25% of global smartphone memory, Apple's perspective may not represent the entire market.

Impact for Memory Stock Investors

Kuo suggests investors should consider outlooks from Qualcomm and MediaTek for a more accurate gauge of non-AI and smartphone memory demand. The analyst believes their guidance provides a better reference for market trends than Apple's statements.

Summary and Outlook

Looking ahead, non-AI memory stock valuations may not yet fully reflect this year's expected earnings momentum. For 2027-2028, AI memory demand is projected to offer better visibility and growth prospects than its non-AI counterpart.

FAQ

Q: What did Apple say about memory costs?
A: Apple described rising memory prices as a "cost pressure" that will increasingly impact gross margins in the second quarter.

Q: Why is Apple's view on memory demand unique?
A: Apple's large market share and strong bargaining power mean its experience may not reflect broader memory market conditions.

Source: Investing.com