Apple investors fixated on the soaring cost of memory chips are missing the bigger picture, according to one analyst.

While Bernstein analyst Mark Newman estimates that component costs for the next iPhone could be 15% higher this year, he doesn’t see that as a reason to be worried. Newman hiked his price target on Apple’s stock to $340 from $325 on Tuesday, writing that “the bigger story will be Apple Intelligence / Siri 2.0 coming sometime this year.”

Shares of Apple dipped 0.3% on Tuesday, at $273.68.

On Apple’s earnings call last month, CEO Tim Cook shared that memory costs wouldn’t have much of an impact on the current quarter, but he declined to give guidance beyond that. The company also didn’t share any details about the potential impacts on iPhone prices.

According to Bernstein, average contract prices for mobile dynamic random-access memory have surged 237% since the second quarter of 2025. NAND flash costs have risen 70% over the same period. The increasing component costs could raise the price of the iPhone 18 lineup by 15%, according to Newman. He anticipates a 12% increase to the overall average selling price as some customers to trade down to cheaper models.

“While recognizing the challenges from record memory price
hikes and shortages, Apple is so far managing better than competition,” Newman said. Rising memory costs could lower iPhone gross margins by around 1.5 percentage points by the fourth quarter of 2027, but Newman added that “the impact on [earnings per share] should be relatively muted.”

Apple Intelligence will be the real catalyst for the stock this year, as the company executes on a partnership with Google to combine Apple’s on-device foundational models with Gemini artificial-intelligence models. The launch will provide Apple with an opportunity to clear a major cloud over its stock, as Apple has long been criticized for its lack of an AI strategy compared to other Big Tech competitors.

The hybrid AI architecture is designed to handle certain tasks locally on the device while processing compute-heavy queries on Apple’s Private Cloud Compute — a move that Newman believes will preserve “Apple’s privacy and security as a competitive advantage.” Apple Intelligence could also spur another wave of user upgrades, as the increasing computational demands of AI features would only be available on newer hardware, Newman noted.