Apple (AAPL) PT Lowered to $205 at Aletheia Capital, 'We believe Apple’s hardware margins have peaked'

Aletheia Capital analyst Warren Lau lowered the price target on Apple (NASDAQ: AAPL) to $205.00 (from $215.00) while maintaining a Sell rating.

The analyst comments "We believe Apple’s hardware margins have peaked and face pressure unless the company raises prices or intensifies supplier negotiations. Memory costs are set to triple YoY in C1Q26E, with further escalation likely in C2Q26E. We estimate the memory budget for the iPhone 17 will surge 80–100% sequentially in 2Q26E, followed by an additional 30–40% QoQ increase in 3Q26E, as Apple replenishes depleted inventories through January supplier renegotiations. Consequently, we project iPhone17’s BOM will rise 500–600bps in 2Q26E, compressing the gross margin by ~400bps, with a further ~250bps contraction in 3Q26E. Other hardware lines may suffer an even greater margin squeeze given their structurally lower profitability. In parallel, Apple is accelerating R&D investment—up 25–30% YoY—focused on AI deployment, which could dilute operating leverage. Despite these headwinds, iPhone 17 demand remains robust. We have trimmed EPS forecast and cut our target price to $205 (SOTP) from $215."

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