Apple Shares Rebound Toward Records Amid Foldable Launch and Margin Pressures

Apple shares have regained momentum, climbing above $330 on Friday after an earnings-driven selloff briefly pushed the stock toward $300. This rebound places AAPL back on an upward trajectory, bringing it within reach of its late-July record high above $344. The recovery occurs as investors weigh the company's near-record valuation against growing concerns over profitability and slowing growth in key service areas.

The primary driver of the renewed interest is the launch of the foldable iPhone Duo, which starts at approximately $1,999 and reaches around $3,000 for higher-storage models. This device marks one of Apple’s most significant hardware changes in years, combining a larger foldable display with an ultra-thin design. While the premium pricing aims to boost average selling prices and trigger a new upgrade cycle, it also introduces risks if consumer demand softens amid broader economic pressure and rising component costs.

Foldable Device Raises Pricing Expectations

Morgan Stanley analyst Erik Woodring characterized the recent product event as a stronger display of innovation than seen in recent years. The showcase featured not only the foldable iPhone but also new A20 chips, upgrades to the iPhone 18 Pro lineup, and improvements to Siri. For John Ternus, who recently succeeded as CEO, the event served as a critical leadership moment, signaling the company's intent to maintain its premium ecosystem while improving its competitive position in emerging software and hardware technologies.

Memory Costs Pressure Gross Margins

Despite strong product demand that has outpaced supply for iPhones and Macs, Apple faces significant headwinds regarding profitability. Excluding tariff refunds, gross margins declined during the June quarter, and management expects another decrease in the September quarter. Rising memory prices are cited as a major factor in this erosion. This creates a difficult backdrop for AAPL, as the current valuation assumes continued strong financial performance; if component costs continue to rise faster than Apple can adjust prices, earnings growth may face sustained pressure.

Services Growth Slows Amid App Weakness

Investor attention is also turning to the Services business, where recent App Store data indicates a slowdown. Morgan Stanley estimates that calendar third-quarter App Store revenue growth could reach only around 0.5% year over year, down from a previous forecast of 1%. Contributing factors include lower take rates, external linkouts, and weaker gaming demand. With the stock trading near historical valuation highs, the combination of rising hardware costs and decelerating Services growth leaves investors with little room for disappointment in future reporting.