Apple Shares Dip Despite Record iPhone Sales: A Buying Opportunity or a Warning Sign?
Apple Inc. (AAPL) reported staggering fiscal first-quarter revenue, powered by exceptional iPhone demand, yet its shares edged lower in Tuesday's trading. The muted market response highlights investor concerns over rising memory costs squeezing future margins. However, JPMorgan analyst Samik Chatterjee argues the dip presents a strategic entry point, with the stock trading at a discount relative to its historical norms during major product cycles.
Chatterjee, in a research note to clients, downplayed the impact of component inflation, noting Apple's favorable long-term supplier contracts should protect profitability. He emphasized the stock's current forward price-to-earnings (P/E) ratio of about 31x sits below levels seen in previous "super cycles." With Apple embarking on a multi-year artificial intelligence (AI) upgrade journey—including its partnership with Google for Gemini integration and a planned Siri overhaul—the analyst believes the company has multiple levers for sustained growth.
"We maintain our 'Buy' rating with a $315 price target," Chatterjee stated, implying a nearly 24% upside from current levels. His optimism is partly shared on Wall Street, where the consensus rating remains a "Moderate Buy" with a mean price target of $289. Options market activity also suggests traders see room for the rally to continue, with some April contracts targeting prices around $275.
Looking ahead, industry whispers of a foldable iPhone launch by year-end could further boost average selling prices and investor sentiment into 2026. While near-term cost pressures are a reality, the overarching narrative from bullish analysts is one of a tech titan trading at a relative value, poised to capitalize on the next wave of AI and hardware innovation.
Market Voices:
"This is classic Apple," says Michael Torres, a portfolio manager at Horizon Capital. "The market gets fixated on a single quarter's cost headwinds and misses the forest for the trees. Their ecosystem loyalty and the coming AI integration are the real story. I'm adding to my position."
"I'm skeptical," counters Lisa Chen, an independent tech analyst. "This feels like justification after a price drop. A 31x P/E is 'discounted'? Services growth is slowing, and 'AI promises' are the buzzword of the day to hide lackluster innovation. I wouldn't touch it here."
"The data supports patience," notes David Park, a long-time retail investor. "I've held through bigger dips. The brand strength, the cash flow, and the installed base are unmatched. Rumors of new form factors like a foldable phone just add to the long-term potential."
Disclosure: The author had no positions in the securities mentioned at the time of publication. This analysis is for informational purposes only and was adapted from source material.