Tech giant Apple (AAPL) unveiled its new products, including the iPhone 17 line and AirPods Pro 3, at the much-awaited “Awe Dropping” event on Tuesday. Interestingly, the company didn’t raise the prices of most of its products and absorbed the tariff-led increase in costs amid intense competition from local players in key markets like China. Apple stock fell 1.5% yesterday, as the company’s pricing strategy raised concerns about margin pressures.
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Apple Takes Tariff Hit to Stay Competitive
Among Apple’s key new launches was the iPhone Air, which boasts a high-density battery and a brand new processor. The iPhone Air will be priced starting at $999, which is between the company’s other models, as expected by some analysts. The iPhone Air will compete with Samsung Electronics’ (SSNLF) Galaxy S25 Edge.
Furthermore, the price of the iPhone 17 base model’s 256-gigabyte version will start at $799, which is the same as the cost of the iPhone 16 model with half the storage space. Also, Apple’s iPhone 17 Pro has a starting price of $1,099 for a 256-gigabyte model, the same as the previous year’s iPhone 16 Pro with the same storage size. Additionally, the company kept the prices of its watch models and the new AirPods Pro 3 intact compared to the previous models.
Overall, through its pricing strategy, Apple has indicated that it will absorb tariff costs to remain competitive in the market, given the intense rivalry from Samsung and domestic players in China. Apple had earlier cautioned investors of a $1.1 billion tariff-related hit to its September quarter results. In the June quarter, the company recorded tariff-led costs of $800 million.
Is Apple Stock a Buy, Hold, or Sell?
Given macro pressures on consumer spending, intense competition, and tariff woes, Wall Street is cautiously optimistic on Apple stock. The Moderate Buy consensus rating on Apple stock is based on 16 Buys, 13 Holds, and one sell recommendation. The average AAPL stock price target of $239.35 indicates a modest upside potential of 2.1% from current levels.
