Apple stock drops by 6% as memory and component costs rise

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Technology company Apple’s stock dropped by 6% on Thursday after the company hiked its prices by 20% for its products. 

The firm has rolled out price increases across more than half of its product catalogue in response to rising memory and chip costs due to the swell in demand for these components for AI infrastructure and data centers which usually require compute power in bulk. 

Microsoft had raised prices for its Xbox console as well, a move that now makes its gaming products 30% to 40% more expensive than last year. 

The KOSPI—the barometer of financial health for South Korean equities—dropped by 8%, continuing the volatile behavior that has been observed over the last 5 days. 

The NASDAQ100—which tracks large-cap technology companies—rose by 0.81%, reflecting a mix of positive and negative movements both present among tech stocks, with negative movements occurring for companies in the magnificent seven (Apple, Microsoft).

• GOOGL: $343.71 (-0.46%)
• AAPL: $275.15 (-6.12%)
• AMZN: $227.01 (-3.10%)
• META: $542.87 (-2.65%)
• MSFT: $352.83 (-3.46%)
• NVDA: $195.74 (-1.64%)
• TSLA: $375.12 (-0.11%)

On the other hand, the market is seeing positive movements for companies with a well-defined data center and AI infrastructure segment or a critical role in the chip supply chain. (Qualcomm, Micron).

• S&P 500 (SPY): +0.14%
• NASDAQ (QQQ): +0.81%
• Dow Jones (DIA): +0.14%
• Russell 2000 (IWM): +0.75%

While American tech equities were able to hold up as a whole even with the price increase update, Asian equities were not able to, with the following movements noted at the time of writing.

Summary

Cramps on the supply chain for components means technology large-cap firms with a core focus on consumer electronics could be facing the issue of a crunch in supply of necessary components. In the view of SGFX research desk, If the demand for semi-conductors and components continues to rise, businesses with a core segment that is consumer-electronic focused could be facing rising costs over the next 3 to 6 months. 

Research references

• CNBC data
• TIKR Terminal data
• Apple Shares Sink After Price Hikes Hit iPads and Macs - Bloomberg
• AI Cost Reality Check Hits Asia Tech Stocks as Apple Hikes Price - Bloomberg

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