French bank BNP Paribas has upgraded Apple from "Neutral" to "Outperform" and raised its price target from $260 to $300. The reason: The global shortage of memory chips is working in Apple's favor compared to smaller manufacturers.
The memory chip crisis currently shaking the global smartphone market is working to Apple's advantage, according to BNP Paribas. In an investor note published today, analysts argue that Apple's size and unique supply chain put the company in a stronger position than its competitors. The result: an upgrade of the stock and a new price target of $300 – an increase of 15.3 percent over the previous assessment.
While the global smartphone market is suffering from a memory chip shortage, forcing many manufacturers to raise prices, BNP Paribas believes Apple is profiting from this situation. The analysts' thesis aligns with what other observers have noted in recent weeks: Apple is strategically exploiting the weakness of its competitors to gain market share.
Apple's advantage in the crisis
BNP Paribas analyst David O'Connor argues that the memory crisis is primarily affecting smaller competitors in the low and mid-price segments. Their thin margins leave little room to absorb increased component costs without raising sales prices – which in turn dampens demand.
Apple, on the other hand, has more levers at its disposal regarding revenue and costs than its competitors. Even though the iPhone maker is also affected by the storage shortage, its size, supply chain relationships, and premium product portfolio allow it to react more effectively. The result: Apple can profit from gains in iPhone market share and the continued shift towards premium devices. This assessment aligns with the strategy analysts have already observed with the Mac.
What Apple itself has said about the situation
In the last earnings call at the end of January, Tim Cook and CFO Kevan Parekh explained that Apple had emerged from the December quarter with very low iPhone inventory. Demand had exceeded expectations, which is why Apple was now in a "supply chase"—meaning it was trying to catch up with demand through production.
According to Apple, the bottlenecks at that time related to chip production limits, not memory chips. However, Apple expects memory costs to have a greater impact on margins in the March quarter. The figures will be released on April 30 as part of the next quarterly report.
Cook also mentioned that Apple has "a number of options" to deal with rising storage costs – without giving details.
Price development and outlook
Apple shares closed at $270.23 on Friday, up 2.59 percent. Since the last quarterly report, the stock has gained approximately 5 percent despite general market volatility. This volatility was partly due to the Iran conflict, which affected some of Apple's Indian manufacturing facilities.
BNP Paribas' new price target of $300 implies further upside potential. Whether this optimistic assessment is confirmed depends largely on the earnings report on April 30 – and on how severely margins are actually suffering from the storage crisis. (Image: Shutterstock / Anderson P)
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