Apple's iPhone Price Growth Strategy in Jeopardy

Wall Street analysts are growing increasingly skeptical of Apple's ability to maintain its iPhone price growth strategy. Jefferies, one of the firms that has downgraded Apple to Underperform, warns that the company's plan to extract ever-higher prices from consumers is in jeopardy.

The main reason for this downgrade is Apple's cancellation of its all-glass iPhone model, which was expected to debut in September 2027. Jefferies analyst Edison Lee believes that the cancellation is a major setback for Apple's efforts to introduce new form factors and drive higher average selling prices (ASPs).

According to Lee, Apple had planned to extend the all-glass design feature to future Pro and Pro Max models, creating another runway for lifting ASPs. However, with this path now closed, Lee has slashed his estimated compound annual growth rate for iPhone ASP between fiscal 2026 and 2031 to 6.8% from 9.0%. He has also trimmed fiscal 2028 and 2029 earnings-per-share estimates by 2.1% and 3.4%, respectively.

The cancellation of the all-glass model leaves Apple's first foldable iPhone as 'the only key driver of higher ASP and margin' in the near term, according to Jefferies. However, Lee is not optimistic about the foldable's prospects either, forecasting unit sales of just 14 million in fiscal 2028.

The analyst also notes that memory costs are soaring due to the rapid expansion of artificial intelligence infrastructure, threatening to push the foldable's starting price to $2,199 for the 256GB version. This would make it a niche product, according to Lee.