Apple raises iPhone prices. Why carriers could cushion the blow?

Investing.com -- Bank of America said in a note Thursday that U.S. wireless carriers have sweetened their iPhone promotions enough to offset Apple's price increases this year, supporting demand for the new lineup.

Analyst Wamsi Mohan, reiterating a Buy rating and $370 price target on the stock, said maximum trade-in credits for the iPhone 18 Pro Max have risen to $1,200, up from $1,100 for last year's model and $1,000 the year before.

"The higher promotions largely offset Apple's higher pricing this year," he wrote.

Mohan added that carrier financing programs, which bundle device payments with wireless service over 36 months, further improve affordability.

While lead times suggest the iPhone 18 Pro and Pro Max are shipping faster than last year, he said the richer subsidies could continue to support demand.

The promotions are targeted at customers with relatively recent iPhones, the analyst noted, with carriers "focused on accelerating upgrades among customers with newer devices."

Verizon and AT&T generally require an iPhone 14 or newer for the maximum credit, while T-Mobile requires an iPhone 15 Pro or newer.

According to the analyst, trade-ins do not eliminate upfront costs, however.

Customers still pay an activation fee and tax on the full retail price, leaving an initial outlay of about $291 to $296 for the iPhone 18 Pro and $400 to $405 for the Pro Max.

Mohan said the deals also benefit carriers, which require customers to sign up for higher-tier unlimited plans and spread trade-in credits as monthly bill credits over the installment period, helping retain subscribers.

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