BUZZ-Street View: As profit margin pressures increase, Apple shifts focus to hardware

November 3 - ** Apple AAPL.O warned on Monday (link) that rising memory chip costs will continue to pressure profit margins during the holiday quarter, but also stated it has secured supply to mitigate the impact of supply disruptions

** Shares fell 3% in pre-market trading

Hardware takes on the heavy lifting

** Morgan Stanley (maintains "Overweight" rating, target price: $350) said stronger iPhone demand and pricing should support growth, but rising memory costs and a slowdown in services growth may continue to keep margins under pressure through fiscal 2027

** Melius Research ("Buy" rating, target price: $370) said easing chip shortages and robust demand in the Chinese market should put Apple on track to beat revenue expectations, although rising memory costs could still pressure margins

** JPMorgan ("Overweight", target price: $355) said a strong hardware cycle should support earnings growth, while commercialization of Siri AI and a broader suite of services may, over time, revive growth in the services business

** Citi ("Buy", target price: $365) said rising memory costs and Siri AI-related expenditures are expected to continue pressuring margins beyond the December quarter

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