BofA Analysis Suggests Low Impact on Apple of Higher Component Prices

Apple is best placed to withstand memory inflation

Analyst Wamsi Mohan told clients in a note that the bank applied its existing elasticity framework to assess how Apple, Dell and HP can offset sharply higher component prices expected in 2026.

Mohan wrote that NAND prices are projected to rise “+140% in C26 and DRAM +14% in C26,” forcing PC OEMs to rely on a mix of “price increases, reconfigurations, and pressure on supply chain to offset headwinds.”

BofA divided each OEM’s units into demand-elasticity cohorts and found that Apple is best placed to withstand memory inflation because its “units skew the least elastic with ~85% in the Inelastic cohort.”

Based on BofA’s modelling, Apple faces a potential earnings impact of just $0.12, compared with $3.77 for Dell and $1.55 for HPQ.

Mohan said the bank does not expect the full theoretical impact to materialize because memory pricing in long-term contracts is likely to be lower than current projections.

“The implied downside to EPS is modest for AAPL,” he wrote, adding that BofA maintains its Buy rating on optionality from new products, new markets and “eventual success with AI at the edge.”

BofA believes Apple’s operating margins could still see over 600bps of year-over-year deleverage, though they remain positive due to the company’s stronger profitability. Dell and HP would need to cut operating expenses by 5–20% and reduce specifications to remain profitable.

The bank now expects 2026 PC units to fall 8% year over year, compared with a prior view of flat growth..

Source: Investing.com

NB: "I've seen gluts not followed by shortages, but I've never seen a shortage not followed by a glut." Nassim Taleb.