Tim Cook Warns Apple Product Price Hikes Are Unavoidable Due to Higher Chip Costs. What That Means for AAPL Stock.

Apple (AAPL) CEO Tim Cook delivered some tough news for consumers this week. He announced that price hikes on Apple products are coming, and there is simply no way around it.

The warning came during an exclusive interview with the Wall Street Journal, where Cook said the situation with memory and storage chips has become too costly for Apple to absorb on its own. Cook told the Journal he has never seen anything like this in more than 40 years working in the electronics supply chain. “This is a hundred-year flood,” he said.

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The iPhone maker has been trying to shield customers from the rising costs, but that window has closed.

Why Apple Is Forced to Hike Product Prices

The root of the problem is a global shortage of memory chips. These components, known as DRAM (memory) and NAND (storage), are inside nearly every computing device sold today.

The issue is that artificial intelligence data centers have been consuming these chips at an accelerated pace. Since Alphabet (GOOG) (GOOGL), Microsoft (MSFT), Meta Platforms (META), and Amazon (AMZN) began dramatically expanding their AI infrastructure spending last year, prices for both DRAM and NAND memory have roughly quadrupled, according to the Wall Street Journal.

Three companies control most of the world’s DRAM supply: Samsung and SK Hynix in South Korea, and Micron (MU) in the United States. While Micron stock is up 800%, SK Hynix has risen over 1,000% in the last 12 months.

Morgan Stanley (MS) projects that wafer capacity for consumer tech will fall as much as 15% short of demand by 2027, even as overall DRAM production grows, because manufacturers are prioritizing specialized chips for AI servers.

What Higher iPhone and Mac Prices Could Mean for You

Cook did not reveal a timeline or specify which products would be affected first. However, he made the direction clear: price increases are unavoidable.

According to a BBC report:

Macs and iPads could see price changes sooner.
Apple already removed the lowest-priced Mac Mini configuration earlier this year, effectively raising its starting price by about $200.
As for the iPhone 18, expected to debut in September, analysts at research firm Omdia forecast Apple’s next phones could cost up to $150 more than the iPhone 17 lineup.
TechInsights puts that number even higher, estimating that maintaining current profit margins on the iPhone Pro would require adding roughly $270 to its price.
The average selling price of smartphones worldwide is on track to reach an all-time high in 2026, rising around 20%, according to Omdia.

Apple’s Strong Quarter Shows What is at Stake

In fiscal Q2 of 2026 (ended in March), Apple reported revenue of $111.2 billion, an increase of 17% year-over-year (YOY). iPhone sales rose 22% to $57 billion, a fiscal Q2 record.

Apple’s gross margin came in at 49.3% as Chief Financial Officer Kevan Parekh noted on the earnings call that memory costs were already a headwind in the March quarter and would be “significantly higher” in the June quarter.

Apple’s installed base now exceeds 2.5 billion active devices. It operates at a scale that makes any price change across its product lineup a major economic event, not just for Apple shareholders but for tens of millions of everyday consumers.

Cook said Apple is willing to deploy its cash reserves to help boost memory supply, but ruled out building its own chip fabrication plants.

The company spends tens of billions annually on memory and storage, making it one of the world’s largest chip buyers, yet AI hyperscalers are now outbidding Apple with multiyear supply contracts and huge upfront payments.

For consumers, the takeaway is straightforward. If you have been waiting to upgrade your iPhone, MacBook, or iPad, the price you see today may be the lowest you see for a while.

Is AAPL Stock Still Undervalued?

Valued at a market cap of $4.4 billion, Apple stock has returned 1,120% to shareholders in the past decade.

Analysts project Apple to expand adjusted earnings per share from $7.46 in fiscal 2025 to $14.43 in fiscal 2030. If AAPL stock is priced at 34.07 times forward earnings, which is in line with its 10-year average, it could return less than 15% within the next four years.

Out of the 42 analysts covering AAPL stock, 23 recommend “Strong Buy,” three recommend “Moderate Buy,” 15 recommend “Hold,” and one recommends “Strong Sell.” The average Apple stock price target is $313.61, showing 4.83 upside from its current price. Yet the Street-high target of $400 indicates 33.7% upside for the following 12 months.

On the date of publication, Aditya Raghunath did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com

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