Apple's AI problem hits loyal customers, and iPhone could be next

Apple (AAPL) is on a long-term mission. On a global scale, the buzzword is AI, and Apple is trying to convince investors that artificial intelligence will make its devices more useful, more personal, and more valuable. All of that will contribute to market gains as well.

Now AI is impacting Apple in a different way.

As a result, some of those devices are more costly.

Apple increased prices on a number of MacBook and iPad models following a jump in memory and storage costs, Reuters reports. That might sound like a product-pricing story, but the bigger investor implication is more pointed: Apple is starting to absorb the cost of the AI boom before it has clearly demonstrated how much AI will add to its own top line.

That puts Apple’s most important financial advantage, its price power, under new pressure.

“We have never seen a component price increase this much, this quickly,” Apple told media outlets.

Apple’s AI cost problem is bigger than MacBook prices

What makes it uncomfortable for Apple investors is that the situation is not your run-of-the-mill supply-chain hiccup.

Apple has survived component shortages previously. The company’s size, supplier ties and willingness to commit to big volumes of purchases have allowed it to weather Covid-related plant interruptions, transportation headaches and tariff uncertainty are better than most hardware companies.

This squeeze on RAM is distinct because the buyer on the other side is not another laptop manufacturer.

It's the AI infrastructure market.

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AI data center spending is driving increasing demand for high-bandwidth memory, server-related goods and corporate storage, shifting memory makers’ capacity in these areas. The contract costs of conventional dynamic random access memory are projected to rise 58% to 63% sequentially in the second quarter of 2026, and the contract prices of NAND Flash are expected to increase 70% to 75%, TrendForce forecasts.

That's a huge problem for Apple because its AI story is still more promise than earnings.

Apple’s Services business is already a profit machine. Apple announced revenue of $111.2 billion for its fiscal second quarter, increasing 17 percent year over year, and stated Services revenue hit a new all-time high.

Apple’s Services business is already a profit engine. In its fiscal second quarter, Apple reported $111.2 billion in revenue, up 17% year over year, and said Services revenue reached a new all-time high.

That’s why the recent price rises matter.

If AI-driven component inflation raises the price of Apple devices, the company may have to charge customers more before those same customers see sufficient AI value to warrant the rise.

Apple’s price hikes expose a rare weakness

Apple's new prices target devices important to its broader hardware plan.

The starting price for the MacBook Neo increased to $699 from $599. It was marketed as Apple’s cheapest laptop ever, targeting cost-conscious Windows and Chromebook users.

Related: Apple price hikes raise big question for iPhone shoppers

The MacBook Air with 512 gigabytes of storage jumped from $1,099 to $1,299, and the MacBook Pro with 1 terabyte of storage increased from $1,699 to $1,999. The iPad Air with 128 GB of storage went from $599 to $749. Apple also boosted prices of both models of HomePod and Apple TV.

There was not a word about the iPhone.

That’s probably the most essential detail in the story.

Macs and iPads are important, but the iPhone is still what defines Apple to investors. Apple said the business posted an all-time March-quarter record for iPhone revenue in its fiscal second quarter, boosted by demand for the iPhone 17 range.

So far, Apple has stayed away from making the memory crunch an iPhone pricing story. Investors should not assume the same is true for the following product cycle.

More AI:

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Apple CEO Tim Cook cautioned that memory costs would be a bigger problem after the June quarter, Reuters reported.

The iPhone may be next if the pressure keeps mounting, analysts cited by Reuters said.

That’s when the risk starts to get more substantial for Apple stock.

A $100 bump on a cheap MacBook could dent demand a bit. A big jump in the iPhone’s price would test the core premise behind Apple’s value that its customers are loyal enough to keep upgrading as the price gets higher.

Justin Sullivan &sol Getty Images

Apple investors should watch demand, not just margins

Apple's approach to growing costs could maintain margins in the short run.

Not that it is without risk.

The problem is demand elasticity. Apple’s ecosystem allows it to charge more than its rivals, and customers enjoy that, yet even devoted customers can hold off on upgrades when costs go up. This is particularly true for Macs and iPads, which are frequently simpler to stretch for another year than an older smartphone.

The wider market is already giving warning indications.

Average selling prices are growing while the demand for units is softening, said IDC. The research group anticipates the global PC market to fall 11.3% in 2026 and the smartphone market to contract by 12.9%.

And that puts Apple in a tricky spot.

Apple could be in a better position than smaller rivals with stronger supplier relationships and a higher-income customer base. IDC anticipates big vendors with more buying power to benefit from share shifts.

Key takeaways for Apple investors

• Apple’s price hikes are a warning that AI infrastructure demand is raising costs for consumer hardware companies.
• The iPhone was spared in this round, making it the next major product line investors should watch.
• Apple’s Services strength gives it a cushion, but Services still depend on a growing, active device base.
• Higher prices may protect margins, but they also risk stretching Mac and iPad replacement cycles.
• Memory suppliers and AI chip leaders such as Micron Technology (MU) and Nvidia (NVDA) remain more direct beneficiaries of the AI buildout.
• Apple’s long-term AI opportunity remains intact, but the short-term cost of AI is becoming harder to ignore.

Apple’s brand strength, however, is precisely why the market expects it to outperform. If rising prices limit upgrades, investors may wonder how much pricing leverage Apple truly has in a worse consumer hardware cycle.

It’s a competitive edge as well.

The MacBook Neo was designed to provide Apple with a better answer to cheaper PCs. At $699 it loses the price edge over the cleaner it had at $599. Reuters said the new pricing matches Dell Technologies’ (DELL) $699 XPS 13 laptop, which Dell unveiled to compete more directly with the Neo.

That’s not to say Apple is going to lose the premium market overnight.

It does mean Apple’s attempt to push further into value-oriented laptop demand just became harder.

Apple’s AI story now has a cost attached

Apple still has several advantages.

Its ecology is gummy. It has a dedicated consumer base. Its Services division affords it a high-margin revenue stream that many hardware competitors can’t match. Its balance sheet provides some agility when supply chains get complicated.

But the recent price jumps show something investors shouldn’t overlook.

Apple isn't only aiming to make a buck on the AI boom. It’s also fighting that boom for the memory and storage components that make its devices work.

That’s a completely different tale than the clean AI upside that investors have been rewarding across parts of the semiconductor sector.

NVDA gets a revenue accelerator from AI demand. It can underpin price and long-term supply commitments for Micron Technology (MU). For Apple, AI is also a cost challenge, at least for the time being.

That doesn't break the Apple investment thesis.

That makes the next few months all the more important.

If demand for Mac and iPad continues, Apple may say its pricing power hasn't been eroded. If the business boosts prices for its iPhones and people still upgrade, it might be another indication of Apple’s resiliency in the eyes of the market.

But if increased prices mean replacement cycles stretch longer, investors could have to reassess one of Big Tech’s most enduring beliefs: that Apple can always pass on greater costs to consumers without penalty.

That is why this narrative is relevant now.

Apple’s AI dilemma is no longer only about Siri getting smarter or Apple Intelligence catching up to rivals. The real question isn't whether Apple can absorb higher memory costs. It's whether the company can keep raising prices without changing the upgrade behavior that has underpinned its pricing power for years.

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