PC maker stocks downgraded on rising memory prices, but not Apple
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Memory. It’s incredibly precious and you don’t want to waste one iota of those you’ve got. That’s just as true of tech as it is for you – memory efficiency isn’t just good product design; it is also a competitive advantage – particularly as the accelerating market around hyperscalers means memory supply is becoming constrained.
Apple is good with memory
This is constraining margins, and impacting some tech firm’s profitability, according to Morgan Stanley, which notes that spot price on memory has increased up to 300% in the last six months, and are anticipated to keep climbing all the way through 2026.
The lack of available memory components along with growing demand means earnings will be impacted, the analyst warn – and within this Apple seems to be the least threatened US company (in part because it uses less of it). Apple CFO, Kevan Parekh, alluded to this during Apple’s Q4 call, saying,
“I would say we’re seeing a slight tailwind on memory and storage prices, so nothing really to note there. As we saw from our gross margin performance, we landed in a pretty good spot above the high end of the guidance range we provided at 47.2%.”
Efficiency is good for business
It’s almost as if Apple’s focus on making systems that are more memory efficient actually helps it. It is also pretty helpful if that efficient memory can take on some of the tasks hyperscale’s demand ram for.
Others are less well-positioned. Morgan Stanley warns that Dell and HP are the most vulnerable US firms, Apple the least, while Acer and Asustek seem vulnerable in the APAC region. Morgan Stanley predicts PC makers may be forced to increase prices to handle the increasing costs, which may well put another hammer down on lacklustre Windows 11 PC sales – and may cause even more people to switch to Apple, which should be less impacted by these trends, and will therefore be more able to sustain costs.
PC industry downgrades
Following its analysis, Morgan Stanley issued downgrades on the following PC maker stocks:
- Dell Technologies (DELL) to Underweight (from Overweight) with a new $110 Price Target
- HP Inc. (HPQ) to Underweight (from Equal-weight) with a new $24 Price Target
- Asustek (2357.TW) to Underweight (from Equal-weight) with a new NT$500 Price Target
- Pegatron (4938.TW) to Underweight (from Equal-weight) with a new NT$58 Price Target
- Hewlett Packard Enterprise (HPE) to Equal-weight (from Overweight) with a new $25 Price Target
- Lenovo (0992.HK) to Equal-weight (from Overweight) with a new HK$10.20 Price Target
- Giga-Byte (2376.TW) to Equal-weight (from Overweight) with a new $290 Price Target
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