Soaring Memory Prices Will Cannibalize Apple's Profit

ML Research25 FollowersFollow5ShareSavePlay(12min)CommentsSummaryApple faces a structural margin headwind from surging DRAM and NAND prices driven by AI server demand, threatening its premium valuation.With 74% of revenue tied to hardware, Apple's exposure to memory price inflation is huge, risking a 4.9% gross margin hit if trends persist.Apple's supply chain contracts buffer short-term volatility, but prolonged high memory costs will force renegotiation at sharply higher prices.Apple's premium valuation underprices the risk of margin compression in the new memory environment.adventtr/iStock via Getty Images Introduction Apple's (AAPL) (AAPL:CA) dominance in consumer electronics has long been supported by high margins, predictable product cycles, a strong ecosystem, and a powerful brand. However, the current memory market is going through a major structural shift drivenThis article was written byML Research25 FollowersFollowHello, my name is Max. When I was young, one of my dreams was to make enough money through interest to live comfortably. At 14, my father introduced me to the concept of inflation, which shattered that dream but sparked a deeper interest in investing. He taught me about the stock market, and I began paper trading soon after. Initially, I divided my portfolio between a broad market index and a few individual stocks. Quickly, the individual names far exceeded the returns of the broad market index and I shifted my focus. My early success turned out to be mostly luck, and over time I became more disciplined and analytical in my approach. Since then, I’ve continued to trade with the same goal of achieving strong, risk-adjusted returns while constantly improving through study and reflection. I began using derivatives at 18 to better optimize my capital and now primarily focus on swing trading small companies that I believe are undervalued. While I started with technical analysis, I’ve since developed a more balanced approach that integrates both technical and fundamental factors. My motivation for contributing to Seeking Alpha is to publicly document my investment ideas, refine my thinking, and invite constructive criticism from a community of like-minded investors.Closely affiliated with my good friend Dmitri Vinokurov.Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.Recommended For You