Apple shares rise 5% as investors bet on stronger iPhone margins

Apple (NASDAQ: AAPL) rose nearly 5% on July 2, closing at $308.63, up from $294.38, as investors looked past reports of iPhone production adjustments to focus on pricing, product mix and margins.

The rally came as Wall Street weighed a more aggressive iPhone roadmap, including reports that Apple plans at least five new iPhone models between the second half of 2026 and the first half of 2027. Supplier preparations for Apple's first foldable iPhone also drew attention, with production targets reportedly lifted to about 10 million units from an earlier 7 million to 8 million.

A broader launch slate, a move into foldables and higher average selling prices support the case that Apple can defend profitability even as component costs rise and the smartphone market softens.

Reports summarizing Apple's supply plans said the company has already secured components for about 80 million smartphones for the second half of 2026, with total 2026 smartphone production expected to exceed 220 million units. Morgan Stanley analysts, as cited in market coverage, said Apple could reach more than 250 million iPhone shipments in fiscal 2027 if foldables and artificial intelligence features lift demand.

Memory costs are central to the debate. Industry researchers have pointed to tightening DRAM and NAND supply as chipmakers prioritize AI data-center demand over smartphones, pushing up input costs across the handset market. Counterpoint Research has said those pressures are likely to weigh on 2026 global smartphone shipments while forcing price increases across the sector.

Apple's response combines pricing and sourcing. Market reports noted that Apple recently raised prices on several hardware products in an uncommon mid-cycle move, reinforcing the view that it is willing to pass through higher memory costs. Counterpoint has projected nearly 7% average selling price growth for iPhones in 2026, more than double its earlier estimate, while forecasting only a modest year-over-year dip in unit shipments.

That matters because Apple's investment case is increasingly tied to mix rather than volume. If higher-end devices account for a larger share of sales, and a foldable model opens another premium tier, revenue and gross margin can hold up even as industry shipment growth slows.

Apple's reported effort to broaden memory sourcing for devices sold in China also drove Thursday's move. Market coverage said Apple has held talks with ChangXin Memory Technologies and Yangtze Memory Technologies, two Chinese chipmakers that have drawn U.S. scrutiny. Apple has not confirmed any agreement, and the talks were described as ongoing.

The discussions could help Apple secure supply in a constrained market, but they add geopolitical risk. Any formal arrangement involving Chinese memory suppliers on U.S. defense-related lists would likely invite closer political and regulatory attention.

The stock reaction suggests investors judged the margin upside from pricing power, premium product expansion and supply-chain flexibility to outweigh near-term concerns about iPhone output. A one-day move of this size is unusual for a company of Apple's scale, signaling that the market is reassessing the earnings profile of the iPhone franchise, not just its shipment outlook.