Apple's Perfect Storm: Rising Memory Prices and Priced-for-Perfection Stock

Apple's incoming CEO John Ternus is inheriting a company dealing with rising memory chip prices, which could severely affect its business. According to Apple CEO Tim Cook, these prices are undergoing a '100-year flood.' In his last earnings call, Cook stated that the increasing costs are causing Apple to raise prices on some products, but this may not be enough if prices continue to rise.

The problem is exacerbated by Apple's stock being priced for perfection. With a price-to-earnings ratio of 35 times earnings, regardless of whether using forward or trailing earnings, it indicates zero growth for the rest of the current fiscal year. This makes it seem absurd when compared to other companies like Nvidia, which trades at 34 times trailing earnings and 24 times forward earnings despite growing at an impressive 85% year-over-year pace.

This perfect storm could be disastrous for Apple, forcing Ternus to deal with a crisis just a few months into the job. The company's significant pricing power can only do so much to offset rising memory prices. It remains to be seen how this situation will unfold and what impact it will have on Apple's stock performance.