Apple's Margin Squeeze: A Threat to Record-Breaking Growth

Apple's June quarter was its best ever, with revenue up 16% and iPhone sales growing 22%, but the stock's price is built on high expectations that may be hard to meet.

The company trades at a multiple of 37.7 times trailing earnings, near the top of its ten-year range, which implies that investors are betting on continued record-breaking results.

However, Apple's gross margin is under pressure due to rising memory costs, which account for more than half of each step in the company's production process.

The DRAM market has only three suppliers, and management says more would help supply but not necessarily price. To offset the increasing cost, Apple has raised prices on Mac and iPad products, but it's too early to tell how buyers will respond.