Apple

The iPhone 18 Pro starts at $1,199 with 256GB of storage, $100 more than the iPhone 17 Pro. The Pro Max starts at $1,299 and the foldable iPhone Duo at about $2,000. Many U.S. buyers pay monthly; Apple quotes $49.95 a month over two years for the Pro.

Apple designs the processor, modem and wireless chips, and TSMC manufactures the processor. Partners in Asia do final assembly of substantially all Apple hardware, mostly Foxconn and Tata in China and India. Apple owns none of the factories, so it pays market prices for anything it doesn't design.

Memory is the clearest case. Samsung supplies most iPhone DRAM, and Apple reportedly accepted a 100% price rise for iPhone 17 memory. Price talks moved from every six months to every quarter. TrendForce estimates the parts in a 256GB iPhone 18 Pro cost about 38% more than last year's model, almost all of it memory.

The $100 price rise covers only part of that, and TrendForce expects Apple to give up some margin to protect volume. The Duo is the bigger pricing test, but its sold-out preorders were capped at two per customer.^{8,14,3,20,32,31,35,30}

Memory costs are pushing device prices up across the industry, and the buyers who drop out first are at the cheap end. IDC says global phone shipments fell 22% in the September quarter, the steepest drop it has recorded. Xiaomi fell 29% and OPPO 35%, while Apple fell 4%.

Apple's buyers are wealthier and less sensitive to price, and Apple's margins can absorb costs that would wipe out a low-end Android maker's profit. So a shortage that shrinks the whole market moves share toward Apple. PCs show the same pattern: Mac units fell about half as fast as the market.

The exception is Huawei in China. It designs its own chips and grew 17% while almost every other brand shrank, so it is the one rival gaining faster than Apple in Apple's third-largest region.^{25,26,27,28,29}

Gross margin is the share of each sales dollar Apple keeps after paying to make what it sells. The June quarter's 50.1% was a record, but about 2 points came from tariff refunds. In February the Supreme Court struck down tariffs imposed under an emergency-powers law, and Apple books the money it gets back as lower product costs.

Take the refunds out and the trend runs the other way. September's reported 47.9% included about 1 point of refunds, so the underlying figure was about 46.9%, down from about 48.1% in June. The finance chief said memory explained more than all of the drop from March to June.

The December forecast is 45–46%. Apple says it reflects mainly higher memory costs and some costs of rolling out Siri AI, and it expects memory prices to keep rising after December. Price increases, carry-in inventory and lower non-memory component costs offset part of it. TrendForce estimated memory rose from about 10% to 34% of the parts cost of a 256GB iPhone 18 Pro.

Apple doesn't say how much refund money is left to come, what it pays for memory under contract, or whether the December forecast includes refunds.^{1,3,24,23,31,39,40}

Services bundles very different businesses: App Store commissions, iCloud storage, AppleCare, Music, TV, payments, ads and licensing. Apple reports one total. The licensing line is mostly Google, which pays Apple 36% of the search ad revenue from Safari to be its default search engine. Court documents put the payment at about $20B in 2022.

That money has almost no cost attached, so it is worth more than its size suggests. Against fiscal 2025, $20B would be about 18% of Services revenue and roughly a quarter of Services gross profit. Those are our estimates; Apple doesn't disclose the current amount.

In 2025 Judge Mehta let the payments continue but barred exclusive deals and limited each one to a year. Google has appealed the whole ruling. Apple's annual report warns a reversal could revive the Justice Department's proposal to ban Google from paying Apple at all.

The App Store is the second legal risk. A U.S. court bars Apple from charging any fee on purchases that apps send to outside websites, and the Supreme Court will hear Apple's appeal. Apple said mobile gaming was soft last quarter even as the App Store set a June-quarter record.^{3,20,23,33,34}

Apple trades at 35 times the earnings analysts expect over the next 12 months. That ratio is the multiple: what investors pay today for each dollar of a year's earnings. That is pricier than it has been 80% of the time over the past five years, when the middle was 32.

Analysts expect earnings to grow about 13% the year after, against about 16% for the S&P 500. The S&P 500 trades at 19 times. Apple's earnings are expected to grow slower than the market's, so the premium has to rest on something other than growth, such as how dependable those earnings are.

On roughly $479B of sales in fiscal 2026, each point of gross margin is worth about $4.8B of gross profit, or about 27 cents a share after tax. That is close to 3% of what analysts expect Apple to earn per share in fiscal 2027.

Memory has taken about 2.4 points since the March quarter, measured without tariff refunds. On a $114B quarter that is about $2.7B of gross profit. The December forecast points to another point or more.

Services is the offset. Its gross profit was $23.2B in the June quarter, about $2.5B more than a year earlier. So a year of Services growth makes up most of the memory hit so far, but Services growth is slowing to 8% to 9%.^{3,20,24,23,15,39,40}