Less than four weeks after being raised to $345, the price target has been lowered again. The decisive factor is not the figures Apple presented on Thursday evening, but rather the question of how many devices the company will actually be able to manufacture in the current quarter. This does not change the rating.
Apple reported $109.4 billion in revenue for the June quarter and increased earnings per share to $2.02 – the strongest June in the company's history. However, something else mattered to the stock market: Apple itself is forecasting revenue growth of nine to eleven percent for the September quarter, while the consensus among analysts was around twelve percent. The stock fell to around $306 in after-hours trading and closed down more than seven percent. The first tangible reaction came a few hours later from JP Morgan – and it was milder than the price drop would suggest.
What's pulling the price target down
The new target price is $340 by December 2027, down from $345 previously. JP Morgan maintains its overweight rating. The adjustment is attributed to ongoing supply chain bottlenecks and rising component prices. Both factors impact different parts of the balance sheet: limited availability is putting pressure on revenue, while the more expensive components are affecting the gross margin.
On the demand side, however, JP Morgan sees no cause for concern. The iPhone 17 and MacBook Neo continue to perform strongly – the notebook has outsold the MacBook Air and MacBook Pro for months. The upcoming launch of Siri AI is also expected to support demand in the coming months.
Delayed revenue instead of lost revenue
The central idea behind JP Morgan's calculation is that supply shortages delay sales, they don't prevent them. Customers who want to buy a device that's currently unavailable will buy it later – the revenue simply shifts to a later quarter instead of disappearing entirely. Apple itself anticipates significantly greater supply shortages in the September quarter than previously expected, which is more likely to exacerbate this shift than mitigate it.
This explains precisely why the price target only drops by five dollars, even though the stock lost around seven percent in one evening. Those who interpret the bottlenecks as a time constraint hardly need to adjust the long-term valuation.
Two levers against higher costs
JP Morgan suggests two ways to combat the margin pressure. First, Apple can negotiate harder on components other than RAM and cut costs there, which would then increase memory prices. However, this room for maneuver is limited: even a broader range of suppliers won't lead to lower memory prices as long as demand from the AI sector is depleting the market.
Secondly, the services business is expected to grow because Apple is offering higher AI quotas through paid iCloud+ tiers. Basic features remain free; users who need more features pay for the larger package. After a services quarter that fell short of expectations at $31.22 billion ($30.74 billion), this contribution would be well-timed for Apple.
How much of the AI revenue actually reaches Germany
Two of the aforementioned drivers require Siri AI to run on the most widely used Apple device – and that's precisely what's not currently the case in Germany and Austria. Apple confirmed in June that Siri AI will not launch in the EU with either iOS 27 or iPadOS 27; this is due to unresolved interoperability requirements from the Digital Markets Act. To date, there is no release date. Macs and Vision Pro are exempt from this restriction. The Apple Watch was also mentioned in Apple's initial announcement, but is effectively excluded as well: On the watch, the new features require a paired iPhone running Siri AI – and that's exactly what's missing in the EU.
Switzerland is neither in the EU nor the EEA and therefore not covered by the DMA – Siri AI will launch there on the iPhone as usual. For you as a user in Germany or Austria, this means that the surge in demand that JP Morgan expects for the fourth quarter, and the iCloud+ revenue from AI quotas, will initially be generated largely outside your own market. Europe was Apple's second-largest region in the June quarter with $29.4 billion and an increase of 22.4 percent – the lag in AI features is therefore significant.
The target price remains significantly above the current price
With the stock trading at around $312 in after-hours, a target of $340 still represents almost nine percent upside potential. The price action of the past few weeks also illustrates how small the current increase is: On July 7, the target was raised by $20 from $325 to $345; now it's being reduced by five dollars. Prior to the earnings release, analysts were already largely expecting a strong quarter with a challenging outlook – both of which have materialized.
The crucial question is whether the shortages actually prove to be a temporary postponement. If Apple can meet the demand through the winter quarter, Thursday evening's stock price drop was merely a snapshot in time. If the devices remain scarce for longer, the problem shifts from the supply side to the demand side – and then even the most patient analyst calculations won't help. (Image: Shutterstock / Who is Danny)
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