Citi has lifted its price target for Apple, citing the company's ability to grow market share and maintain strong margins despite a global memory chip shortage and higher device prices
Apple's decision to raise prices on MacBooks, iPads, and other devices in late June 2026 sent its stock tumbling, erasing all of its year-to-date gains in a single session. The move was a direct response to a global shortage of memory chips, which has driven up component costs across the tech sector. For investors, the sharp sell-off was a reminder that even dominant companies are not immune to supply chain pressures and market volatility.
Yet just three weeks later, Apple shares had not only recovered but reached new all-time highs. On July 13, Citi analyst Asiya Merchant increased her price target for Apple to $365 from $315, maintaining a buy rating and projecting roughly 16% further upside from current levels. According to Barchart, Merchant's thesis centers on Apple's ability to gain market share and sustain premium pricing even as the broader smartphone and PC markets face double-digit declines in 2026.
Market Share and Margin Strength
Merchant expects Apple to achieve a record 25% global smartphone market share this year, up two percentage points from the prior period, based on data from Investing.com. This growth comes as overall device shipments are projected to fall, highlighting Apple's resilience in a shrinking market. The company's strategy relies on design-driven demand, aggressive mid-range promotions, and a tightly integrated ecosystem that discourages users from switching to competitors.
Apple's pricing power is also evident in its ability to guide gross margins between 47.5% and 48.5% for the June quarter, despite rising memory costs. Rather than viewing the June price hikes as a warning sign, Merchant interprets them as evidence that Apple can pass higher costs to consumers without losing significant demand. The company's long-term supplier agreements and control over hardware specifications help insulate it from the spot market volatility that affects many rivals.
Services, Ecosystem, and the AI Factor
While much attention has focused on Apple Intelligence and the potential for a new hardware upgrade cycle, Merchant does not expect artificial intelligence features alone to drive a surge in device sales. Instead, she sees improvements like a smarter Siri as tools to keep users within the Apple ecosystem, where they are more likely to spend on services and subscriptions. This services segment has become a major contributor to Apple's profitability, offering recurring revenue that is less sensitive to hardware cycles.
Apple's PC business also stands out, posting 10.1% growth in the second quarter of 2026 even as the overall market contracted. The company's ability to raise prices and still see demand for its products reflects structural advantages built over years, including a loyal customer base and a reputation for quality. As noted in a related analysis of how investor sentiment can shift rapidly in response to company actions, market reactions to bold moves are not always straightforward.
Upcoming Catalysts and Legal Risks
Looking ahead, two events are likely to shape Apple's stock performance in the near term. The company is set to report third-quarter earnings on July 30, with consensus estimates calling for earnings per share of $1.88-a nearly 20% increase from the previous year, according to Seeking Alpha. For a company of Apple's size, this level of earnings growth is notable and helps explain the stock's resilience even during periods of broader market uncertainty.
The next major catalyst is the expected launch of the iPhone 18 in September, which Merchant views as a potential inflection point for investor sentiment. Actual demand data from the launch will provide a clearer picture of whether Apple's hardware momentum is translating into sales. However, the company also faces legal headwinds, including a recent lawsuit against OpenAI alleging theft of trade secrets related to hardware development. While Merchant's analysis does not address the lawsuit, investors will be watching closely for management's comments during the upcoming earnings call.
Valuation and Wall Street Outlook
Citi's new $365 price target puts it ahead of other major banks, with JPMorgan having previously raised its target to $345. At a recent price of around $316, Apple's stock trades at roughly 38 times earnings-a premium valuation for a mature hardware company. Merchant argues that this premium is justified by Apple's unique combination of market share gains and pricing power, which most competitors cannot match. Still, the stock's performance through the next earnings report, product launch, and ongoing legal battles will test how much optimism the market is willing to sustain.
For context, Apple's market capitalization surpassed $3 trillion earlier in 2026, making it the world's most valuable publicly traded company. In the June quarter, Apple reported revenue of $83 billion and net income of $20.7 billion, with services accounting for nearly a quarter of total revenue. These figures underscore the company's scale and the importance of both hardware and services to its long-term outlook.
Apple's ability to maintain high margins and grow market share in a contracting device market highlights the importance of pricing power and ecosystem lock-in for technology companies. Unlike many hardware makers that compete primarily on price, Apple's brand, design, and integrated services allow it to command a premium and weather supply chain disruptions more effectively. For investors, understanding the distinction between short-term market reactions and long-term structural advantages is critical when evaluating companies with dominant positions in their industries.
