Apple stock took a tumble on Thursday over concerns for what higher prices could do to demand. That provides a potential buying opportunity for a tech company that tends to have strong pricing power with customers.
Apple stock fell 6.1% on Thursday after the company raised prices on MacBooks and iPads. Demand for memory and storage is far outpacing supply as those components are used to help power artificial intelligence. The higher costs of these components leads to margin pressure for tech hardware companies like Apple, and that ultimately pressured the iPhone maker to boost prices.
Investors seemed worried about what higher prices could mean for customer demand in the months ahead. Inflation is already sticky, so making nonessential products like laptops more expensive could lead to a decline in sales as consumers might choose to instead spend on the things they need, not the tech they want.
But not everyone on Wall Street seems to think that's the case.
Apple has created an incredibly sticky ecosystem, meaning if someone owns one Apple product, they are likely to buy another one. Morgan Stanley analyst Erik Woodring believes that this backdrop will help keep demand stable.
"If Apple's demand remains relatively inelastic -- as history would generally indicate given the stock ecosystem lock Apple has on customers -- these price hikes could drive upside to both revenue and earnings vs. our current estimates," Woodring wrote on Thursday night. He maintained an Overweight rating and $360 price target on Apple stock.
Nancy Tengler, CEO of Laffer Tengler Investments, agrees.
"Consumers will spend less on something else if they absolutely must have a Mac Pro," Tengler wrote on Friday.
Apple stock was up 1.2% on Friday
The biggest test for Apple's demand strength among consumers hasn't happened yet as the company didn't raise the price of its most popular product -- the iPhone. It's likely Apple's next iPhone release will be more expensive than previous models as component costs rise. There's also a need for more memory as Apple introduces more advanced artificial-intelligence updates.
However, Woodring doesn't think Apple will raise prices on the coming iPhone all that much as the company looks to find a balance between stable margins and consumer demand.
"Apple prioritizes protecting gross profit dollar growth -- rather than gross margins -- on iPhones to limit demand elasticity on its core hardware product while also supporting installed base expansion," he said.
Apple shares have fallen 10% this month and are on pace for their worst month since December 2022, according to Dow Jones Market Data. But the possibility that demand persists through price increases and margins improve means investor sentiment could get a boost.
Write to Angela Palumbo at angela.palumbo@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
June 26, 2026 13:22 ET (17:22 GMT)
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