Apple Inc. (AAPL) continues to demonstrate resilience in a challenging hardware environment, prompting Citi analyst Asiya Merchant to raise her price target on the stock to $365 from $315 on July 13. The revision maintains a “buy” rating and suggests approximately 16% further upside potential for the equity, which reached all-time highs in mid-July.
Analyzing the Growth Thesis
Merchant’s bullish outlook is predicated on Apple’s ability to capture market share despite a contraction in the broader smartphone and PC industries, which are projected to decline by a mid-to-high teens percentage in 2026. Apple is expected to reach a record smartphone market share of approximately 25% this year, an increase of two percentage points over previous levels.
The analyst highlights several structural advantages that differentiate Apple from its competitors:
- Supply Chain Management: Unlike rivals who rely heavily on the spot market for memory components, Apple utilizes long-term supplier agreements, insulating the company from sudden cost spikes.
- Pricing Power: Recent price increases for MacBooks and iPads—implemented to offset rising memory costs—have not dampened demand, signaling strong brand loyalty and ecosystem stickiness.
- Services Focus: While the hardware market remains volatile, the company’s services division continues to drive profitability, with integrated features like a smarter Siri helping to maintain user engagement within the Apple ecosystem.
Market Context and Financial Outlook
The company’s ability to navigate rising costs was evident in its guidance for the June quarter, where it maintained gross margins between 47.5% and 48.5%. This performance follows a brief period of market volatility on June 25, when Apple shares declined following the announcement of device price adjustments. Since that time, the stock has recovered roughly 15%.
Looking ahead, investors are focused on the company’s third-quarter earnings report, scheduled for July 30. Consensus estimates indicate expected earnings per share (EPS) of $1.88, representing a year-over-year increase of approximately 19.75%.
Key Catalysts and Risks
Beyond the upcoming earnings call, market participants are looking toward the September launch of the iPhone 18 as a critical inflection point. Merchant frames this as a significant opportunity to observe hardware momentum through actual demand data rather than relying solely on analyst forecasts.
However, the company faces evolving legal and competitive challenges. Apple recently initiated a lawsuit against OpenAI, alleging the theft of trade secrets. While the impact of this litigation remains to be seen, investors are expected to monitor management’s commentary regarding the case during upcoming financial disclosures. Currently trading at a valuation of approximately 38 times earnings, Apple maintains a premium position among hardware manufacturers, supported by its consistent growth in market share and robust ecosystem demand.
