Apple has fallen for eight consecutive weeks! Storage gloom looms, Goldman Sachs calls for bottom fishing before January 29

Amid investor concerns over rising hardware costs, Apple's stock price has fallen for eight consecutive weeks.

On Friday, U.S. stocks closed with Apple's stock price slightly down by 0.12%, accumulating a nearly 4% decline this week, marking its longest losing streak since May 2022.

(Apple's stock price has fallen to levels seen in mid-October last year)

Apple's stock price has dropped from a 52-week high of $288 set last December to around $248 currently, a decline of up to 13.8%. Additionally, compared to other components of the tech giants, Apple's capital outflow has been particularly pronounced since July last year.

(Net capital inflow trend chart of the tech giants)

The core trigger for the selling pressure stems from warnings on the supply chain side. The pessimistic guidance recently released by chip giant Intel has sparked market panic over soaring storage component costs. Due to the surge in demand for AI hardware, storage chip prices are experiencing sharp increases, and there are widespread concerns that this will severely erode the gross margins of consumer electronics giants, including Apple.

However, despite the gloomy market sentiment, Wall Street Journal mentioned that Goldman Sachs maintained its "Buy" rating on Apple in its latest report and advised investors to ignore short-term noise and "buy the dip" before the company releases its Q1 2026 financial report on January 29.

Goldman Sachs believes that a strong iPhone upgrade cycle and the rollout of AI capabilities will support its performance exceeding expectations.

Surge in Storage Costs Raises Margin Concerns

The pessimistic sentiment regarding Apple's recent performance mainly stems from the rapid rise in storage chip prices.

Wall Street Journal mentioned that Intel's Chief Financial Officer David Zinsner admitted after the earnings report that while the company has secured supply for the first half of the year, storage prices may become a challenge in the second half.

Data from Counterpoint Research further exacerbates these concerns, as the agency predicts that driven by AI hardware demand, storage component costs will soar by 40% to 50% this quarter, with similar increases expected in Q4 2025.

This trend poses a direct threat to Apple. IDC research indicates that in the bill of materials for high-end smartphones (such as the iPhone), storage components account for about 10% to 15% of the total cost. Benchmark analyst Cody Acree pointed out:

The rising costs of components, particularly those related to memory prices, may have unknown negative impacts on shipment volumes and revenue potential.

Additionally, due to memory chip manufacturers like Micron and SanDisk shifting their production capacity towards more profitable AI data center components, there is a tight supply of DRAM and NAND for traditional smartphones and PCs.

UBS analyst David Vogt warned in a report that although Apple's supply agreements may mitigate the impact in the March quarter, the risks for the June and September quarters will significantly increase as production of the next-generation iPhone progresses.

Vogt expects that the shortage of memory chips could impact Apple's gross margin by 50 to 100 basis points. Based on this, UBS maintains a "Neutral" rating on Apple with a target price of $280.

Goldman Sachs View: A Pullback is a Buying Opportunity

Despite inflationary pressures on the cost side, Goldman Sachs analyst Michael Ng believes that now is the best time to buy Apple stock.

Goldman Sachs has set a target price of $320 for Apple and expects the company to deliver an excellent report in the upcoming earnings release.

Goldman Sachs predicts that Apple's revenue for the first quarter of fiscal year 2026 will reach $137.4 billion, a year-on-year increase of 11%. The iPhone business will be the main growth engine, with expected revenue growth of 13% year-on-year to $78 billion. This growth is driven by two main factors:

• First, an increase in sales, expected to rise by 5% year-on-year, particularly with a 26% surge in shipments in China, demonstrating Apple's strong recovery in key markets;
• Second, an 8% year-on-year increase in average selling price, indicating strong demand for high-end models.

Additionally, Goldman Sachs emphasized the supportive role of future product pipelines on stock prices. The report noted that with demand for the iPhone 17 series exceeding that of its predecessor and the anticipated launch of the future foldable iPhone (iPhone Fold), Apple is shifting to a "twice a year" release cycle.

Combined with upgrades to iOS and Siri, as well as collaboration with Google Gemini, the iPhone's position as the preferred hardware entry point in the AI era will be further solidified, continuing the upgrade trend.

Wall Street Consensus and Valuation Outlook

From a valuation perspective, Apple's current expected price-to-earnings ratio is about 30 times, slightly above the industry average, but analysts generally believe this premium is justified considering its stable earnings growth.

Goldman Sachs expects Apple's earnings per share (EPS) for the first quarter to reach $2.66, in line with market consensus, and gross margin to remain at a solid level of 47.7%.

Overall, Wall Street remains bullish on Apple. Among the 42 analysts covering the stock, 21 have given a "Strong Buy" rating. Evercore ISI reiterated its "Outperform" rating and a target price of $330, believing that iPhone sales will grow by 17% year-on-year.

Wedbush analyst Dan Ives even provided the highest target price on the street at $350, believing that 2026 will be a "milestone year" for Apple's AI strategic roadmap. **

As the earnings report date on January 29 approaches, the market is holding its breath to see if Apple can reshape its growth narrative through strong AI terminal demand amid the shadow of storage costs