UBS warns Apple's Mac and iPad price hikes will not protect profit margins

Apple raised MacBook and iPad prices by up to 20% on Thursday, but UBS says the move won't fix what's really squeezing its profit margins: the iPhone.

UBS analyst David Vogt reiterated a Neutral rating and $296 price target on Apple, with shares trading around $278 after the stock posted its worst single-day drop since April 2025. The 6% decline erased billions in market value as investors digested Apple's first formal price increases across its entire Mac and iPad lineup. The Cupertino company hiked prices globally, with the entry-level MacBook Neo jumping from $599 to $699, the MacBook Air 512GB rising to $1,299 from $1,099, and the MacBook Pro 1TB climbing to $1,999 from $1,699. iPad Air 128GB now costs $749, up from $599, while the iPad Pro WiFi 256GB rose to $1,199 from $999.

Apple's online store went down briefly Thursday morning before the new pricing went live. The company also raised prices on the HomePod and Apple TV 4K, but left iPhone, Apple Watch, and AirPods unchanged.

"The consumer electronics industry is facing an unprecedented challenge," Apple said in a statement, attributing the hikes to an AI-driven surge in memory chip costs. "We have never seen a component price increase this much, this quickly."

CEO Tim Cook told the Wall Street Journal last week that the memory shortage amounted to "a hundred-year flood" and that price increases had become unavoidable. DRAM prices rose 98% in the first quarter of 2026 and are expected to jump another 58% to 63% in the current quarter, according to TrendForce.

Memory chip leader Micron reported gross margins of 86%, up from 15% a year ago, as AI data center demand hoards supply.

UBS sees the Mac and iPad price hikes as insufficient to protect Apple's product gross margin, which the bank expects to decline from the June quarter into the September quarter. The real test comes later this year, when Apple must decide whether to raise iPhone prices by $50 to $100 to offset the same memory cost pressures, a move that would carry far more risk given the iPhone accounts for roughly half of Apple's revenue.

Barclays senior analyst Tim Long also reiterated an Underweight rating and $253 price target on Apple on Thursday, calling the stock's 33x forward P/E ratio an unjustified premium given "uncertain growth backdrop, regulatory risks in Services segment, and undefined AI strategy."

Wedbush Securities took the opposite view, maintaining an Outperform rating and $400 target, arguing Apple has the pricing power to pass costs without losing customers.

Xbox followed Apple's move on Thursday, raising console prices by $100 to $150, with the company blaming the same memory component crisis. The entire consumer electronics industry is now grappling with what some analysts have dubbed "Ram-ageddon", a supply crunch driven by AI data centers signing long-term deals with memory makers like Micron, which locked in $22 billion in such commitments this week alone.