Apple has been outperforming. But, the good times could soon end, Daiwa says

Daiwa raised its 12-month Apple price target to $375 from $335 but sees only 9% upside from Thursday’s close, warning that growth may become tougher after the December and March quarters as comparisons tighten and memory costs rise. Apple shares are up nearly 27% in 2026, supported by iPhone 17 demand, and fiscal 2026 revenue rose about 15% to $478 billion; however, supply constraints and higher component costs could pressure growth and margins in 2027. Of 43 analysts covering Apple, 25 rate the stock buy or strong buy, according to LSEG.

Analysis

The key risk is an earnings-quality reversal, not simply slower unit growth: backlog fulfillment can support near-term shipments while obscuring whether underlying demand is sustaining the current run rate. Once channel fill fades, tough comparisons make even modest demand normalization visible in reported growth. If memory pricing resets as prior inventory and contracts roll off, revenue resilience may not protect gross profit; component constraints could also cap shipments before Apple can monetize demand. That creates a potential estimate-revision catalyst over the next one to three quarters, with the larger margin effect extending into 2027.

The stock’s outperformance as an AI-slowdown hedge is a second-order vulnerability: if investors rotate toward nearer-term earnings risk, AAPL could de-rate even without an outright earnings miss. Memory suppliers may gain pricing leverage, while handset rivals face similar input-cost pressure; relative winners depend on who can secure supply and pass costs through. The contrarian case is that a strong product cycle and constrained supply may keep demand latent, so a shipment dip need not imply lost customers. Verify backlog conversion, memory-cost commentary, gross-margin guidance, and supply availability before treating the analyst’s April inflection as established. No valuation or consensus-estimate detail here is sufficient to quantify downside.

Key Decisions for Investors

• Avoid chasing AAPL after its rally; consider trimming or using a defined-risk hedge into the next quarterly update rather than initiating an unhedged short. The setup is asymmetric only if shipment growth or margin guidance begins to weaken.
• Watch the next one to three months for backlog/channel-fill conversion, component availability, and gross-margin commentary. A sustained deceleration in shipments alongside weaker margin guidance would validate the cautious thesis; continued growth with stable margins would falsify it.
• Track memory pricing and Apple’s ability to secure supply through 2027. A faster-than-expected cost reset or persistent constraints would strengthen the downside case; stable input costs and improving availability would reduce it.
• Keep a conditional relative-value watch on memory suppliers versus handset makers, not an automatic long: supplier pricing gains could be offset by demand sensitivity, and the article provides no company-specific exposure data to size the trade.