Apple’s rally pressures new CEO to deliver on foldable iPhone

Beyond the foldable iPhone, Apple also is expected to unveil new iPhone Pro and Pro Max models, AirPods and watches. Photo by Ying Tang/NurPhoto via Getty Images

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Apple Inc.’s US$570 billion summer surge is saddling new chief executive John Ternus with high expectations heading into the company’s most anticipated event in years: the unveiling of the foldable iPhone on Wednesday.

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The stock has rallied 15 per cent since June 25, when the company announced it was raising prices on many of its products, sending the shares to their worst day in more than a year. Since then, a significant chunk of the gains have been driven by excitement about the new lineup of devices, particularly the foldable phone. However, the stock remains down about seven per cent from its all-time high set on July 28.

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Apple is still considered an AI laggard, a long-term fundamental issue for investors. But in the immediate future, the stock’s fortunes will likely hinge on the reception of the new iPhones, the company’s ability to navigate soaring memory costs and the performance of Ternus, who took over from former CEO Tim Cook on Sept. 1.

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The Apple product launch is scheduled to kick off at 10:00 a.m. Pacific time at Apple’s headquarters in Cupertino, California.

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“These events are important every year, but this one has an even greater level of importance,” said Jed Ellerbroek, portfolio manager at Argent Capital Management, which owns Apple shares. “We are embarking on what I think many hope and expect to be a pretty darn good sales cycle here. They need to deliver on that.”

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Apple’s revenue is expected to rise 15 per cent in fiscal 2026, which ends in September. That would be the fastest pace of growth since 2021, when stay-at-home measures during the pandemic sent device sales soaring.

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The stock has also benefited from the company’s reputation as a haven from heavy AI spending, which is weighing on Big Tech peers like Alphabet Inc. and Microsoft Corp. that have committed hundreds of billions of dollars to develop the technology. In a year when Wall Street is growing increasingly uneasy about when those capital expenditures will pay off in a big way, Apple is the second-best performer among the Magnificent Seven tech giants.

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The problem, however, is Apple investors are famously hard to impress on the day of iPhone events. The stock has fallen on five of the past eight days when new versions of the devices were unveiled. The good news? It averages a gain of 10 per cent in the six months following iPhone debuts, according to data compiled by Bloomberg going back to 2007.

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The foldable iPhone is projected to have a starting price of US$2,300 to US$2,500, according to Morgan Stanley analysts led by Erik Woodring. They estimate shipments will total about 6.5 million units in Apple’s fiscal first quarter, which ends in December, translating into sales of roughly US$14 billion, or about 16 per cent of total iPhone revenue expected in the quarter.

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Beyond the foldable iPhone, Apple also is expected to unveil new iPhone Pro and Pro Max models, AirPods and watches. The big question will be whether the company can raise prices to keep up with soaring memory costs and maintain profit margins without scaring off customers.

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“Pricing remains the key unknown, and in our view, the variable most likely to drive the reaction in shares,” JPMorgan analyst Samik Chatterjee wrote in note to clients last week. “Investors are looking for price increases that will help the company find the right balance between limiting price elasticity impact on volumes and limiting further moderation of gross margins.”