Memory prices are surging in 2026, driven by the increasing demand from major tech companies for computing power, outpacing the production capabilities of memory chipmakers. Samsung reported a staggering 90% rise in memory pricing in Q1, prompting companies like Meta, Alphabet, and Microsoft to increase capital expenditures, which will likely pressure their profit margins due to higher depreciation expenses.
Apple, however, appears well-equipped to navigate this challenge. Despite the upward trend in memory costs, Apple reported a record gross margin of 49.3% last quarter, bolstered by strong service sales and improving hardware margins. CEO Tim Cook indicated that while gross margins may decline in the coming quarters due to memory pricing, Apple has several strategies to mitigate impacts, including potential long-term supplier contracts that could stabilize costs and support production capacity.
For market professionals, Apple’s robust financial position and strategic options suggest that it may weather the memory pricing storm better than its peers. With strong demand for its products, particularly the iPhone, Apple could maintain its profitability and market share, making its current valuation attractive amidst rising costs in the tech sector.
Source: fool.com