Apple Faces Margin Pressure Ahead of iPhone Launch
Apple's upcoming iPhone launch on September 9 may have more negative implications for investors than initially thought. According to a research note from KeyBanc Capital Markets, the company is facing gross margin pressure due to rising costs and has two primary options: implementing broad-based price increases or selectively raising prices on certain models.
The report notes that Apple's gross margin in the third quarter of fiscal 2026 was 50.1%, but this includes a non-recurring benefit from tariff refunds. Excluding this benefit, the underlying operating gross margin would be around 48%. KeyBanc estimates that the iPhone 18 Pro could see a $150 price increase to $1,249, while the iPhone 18 Pro Max could rise by $200 to $1,399.
KeyBanc maintains an 'Underweight' rating on Apple with a $250 price target, which is roughly 23% below the market price at the time of the report. The investment bank also cites historical data indicating that Apple shares tend to weaken during iPhone launches, averaging a 0.72% decline on launch day and a 1.22% decline after five trading days.