Apple's Leasing Program May Offset Higher iPhone Costs

Apple's next iPhone may become more expensive due to rising memory and storage costs, but a new leasing program could help customers absorb the increase. According to Morgan Stanley analyst Erik Woodring, iPhone 18 models might cost up to $200 more. However, Apple's Upgrade program allows eligible US customers to lease iPhones through Klarna for 12 or 24 months, with payments starting at $17.99 per month.

The leasing program doesn't reduce the iPhone's price but changes how customers experience it. Analyst Wamsi Mohan from Bank of America described Apple Upgrade as 'directionally positive', highlighting lower affordability barriers and faster replacement cycles. The program also provides an opportunity to capture value from returned devices.

Morgan Stanley expects price increases to add about 1% to fiscal 2027 earnings, assuming unit demand remains resilient. The bank maintained an Overweight rating and a $360 price target for Apple's stock. Analysts believe that a richer mix of premium buyers could support earnings even if demand for cheaper models softens.