Apple has fallen for eight consecutive weeks! Storage concerns loom, but Goldman Sachs bucks the trend by calling to "buy the dip before January 29."
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Amid investors' concerns over rising hardware costs, Apple's stock has fallen for eight consecutive weeks.
At the close of the US stock market on Friday, Apple's stock edged down 0.12%, falling nearly 4% for the week, marking eight consecutive weeks of declines, the longest losing streak since May 2022.
(Apple's stock has fallen to mid-October levels last year)
From the 52-week high of $288 set last December, Apple's stock has fallen back to around $248, a drop of 13.8%. In addition, compared to other constituents of the seven tech giants, Apple's outflows have been particularly marked since last July.
(Net capital inflow trends of the seven tech giants)
The core trigger of the selling pressure comes from supply chain warnings. Chip giant Intel's recent pessimistic guidance has sparked market fears over the soaring costs of storage components. Due to surging demand for AI hardware, storage chip prices are experiencing sharp increases, and the market generally worries this will seriously erode profit margins of consumer electronics giants including Apple.
However, despite the gloomy market sentiment, Wallstreetcn reports that Goldman Sachs in its latest report maintained its "Buy" rating on Apple and recommended investors ignore short-term noise and "bottom fish" before the company's release of its fiscal Q1 2026 earnings report on January 29.
Goldman Sachs believes that a strong iPhone replacement cycle and implementation of AI features will support outperformance.
Surging storage costs raise margin concerns
The market's pessimism over Apple's recent stock performance mainly comes from the rapid rise in storage chip prices.
Wallstreetcn reports that after the earnings release, Intel CFO David Zinsner admitted that while the company had locked in supply for the first half of the year, storage prices could be challenging in the second half.
Data from Counterpoint Research further amplified the worries, as the agency predicts that due to demand for AI hardware, storage component costs will surge by 40% to 50% this quarter, with similar increases seen in Q4 2025.
This trend poses a direct threat to Apple. IDC research shows that, in high-end smartphones such as iPhones, storage components account for about 10% to 15% of the total bill of materials. Benchmark analyst Cody Acree notes:
Rising component costs, especially those related to memory prices, may have unknown negative impacts on shipment volume and revenue potential.
Additionally, since storage chip manufacturers like Micron and SanDisk have shifted production capacity toward more profitable AI data center components, supply of traditional smartphone and PC DRAM and NAND has tightened.
UBS analyst David Vogt warned in a report that although Apple's supply agreements may ease the impact in the March quarter, risks for the June and September quarters will increase significantly as next-generation iPhone production ramps up.
Vogt estimates that storage chip shortages may cut Apple's gross margin by 50 to 100 basis points. On this basis, UBS maintains a "Neutral" rating on Apple, with a target price of $280.
Goldman Sachs view: Pullback presents a buying opportunity
Despite inflationary pressures on costs, Goldman Sachs analyst Michael Ng believes now is the best time to buy Apple stock.
Goldman Sachs has set Apple's target price at $320 and expects Apple to report excellent results in the upcoming earnings release.
Goldman forecasts that Apple's fiscal Q1 2026 revenue will reach $137.4 billion, up 11% year on year. Among that, iPhone business will be the main growth driver, with revenue expected to jump 13% year on year to $78 billion. This growth will be driven by two factors:
First, increased sales, with volume expected to grow 5% year on year, especially as shipments in China surge 26%, demonstrating a strong rebound in key markets;Second, average selling price up 8% year on year, showing robust demand for high-end models.
Additionally, Goldman Sachs highlighted future product pipeline support for the stock price. The report notes that, as demand for the iPhone 17 series exceeds previous generations, and with the anticipated launch of a foldable iPhone (iPhone Fold), Apple is shifting toward a "twice-a-year" release schedule.
Combined with upgrades to iOS and Siri, and its collaboration with Google Gemini, the iPhone's position as the preferred hardware gateway for the AI era will be further solidified, continuing the replacement boom.
Wall Street consensus and valuation outlook
From a valuation perspective, Apple's current projected P/E ratio is about 30 times, slightly above industry average, but given its stable earnings growth, analysts generally consider this premium reasonable.
Goldman Sachs expects Apple's Q1 earnings per share (EPS) to reach $2.66, in line with market consensus, and expects gross margin to remain at a robust 47.7%.
Wall Street overall remains bullish on Apple. Among 42 analysts covering the stock, 21 give it a "Strong Buy" rating. Evercore ISI reiterated its "Outperform" rating and $330 target price, seeing iPhone sales up 17% year on year.
Wedbush analyst Dan Ives has the highest target price on the Street at $350, viewing 2026 as a "milestone year" for Apple’s comprehensive AI strategy rollout.
With the January 29 earnings date approaching, the market is holding its breath, waiting to see whether Apple can reshape its growth story through strong AI terminal demand under the shadow of rising storage costs.
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