Morgan Stanley sizes Apple's foldable at 16% of next quarter's iPhone revenue

The price increase came first, and it did not go well. On June 25 Apple said it was raising prices on many of its products, and the shares had their worst day in more than a year ^[2]. Now the same investors want higher prices. JPMorgan analyst Samik Chatterjee wrote to clients last week that "Pricing remains the key unknown, and in our view, the variable most likely to drive the reaction in shares" ^[14]. He added that "Investors are looking for price increases that will help the company find the right balance between limiting price elasticity impact on volumes and limiting further moderation of gross margins" ^[15]. Elasticity is a claim about what buyers do at checkout, and the only number in the note is the price.

Morgan Stanley analysts led by Erik Woodring expect the foldable to start at US$2,300 to US$2,500 ^[11]. They estimate about 6.5 million units in the December quarter, roughly US$14 billion, or about 16 per cent of the iPhone revenue they expect for the quarter ^[12]. That share implies total iPhone revenue near US$87 billion in the quarter ^[1]. The unit and revenue figures together imply an average of about US$2,150 a phone, roughly US$150 under the low end of the bank's own price range ^[2].

So the device the event is built around supplies about a sixth of the quarter's iPhone money. The other 84 per cent comes from the rest of the lineup, including the new Pro and Pro Max models Apple is also expected to unveil alongside AirPods and watches ^[3][13].

Revenue is expected to grow 15 per cent in fiscal 2026, the fastest pace since 2021 ^[7]. Net income growth is expected at 6 per cent in the quarter ending Sept. 30 and 1 per cent in the December quarter, after consecutive quarters of double-digit increases ^[19]. Fifteen per cent on the top line and one per cent on the bottom is what a rising component bill looks like when list prices do not move with it.

At 33 times expected earnings for the next 12 months, the stock sits 43 per cent above its 10-year average multiple of 23 ^[16][4], and above the S&P 500 at 19 times and the Nasdaq 100 at 21 ^[17]. Part of that premium came from Apple's reputation as a haven from heavy AI spending, and it is the second-best performer among the Magnificent Seven ^[8]. The shares are still about 7 per cent below the record set on July 28 ^[3]. The June 25 close was roughly 19 per cent under that peak ^[5].

Apple shares have fallen on five of the past eight days when new iPhones were unveiled, and have averaged a 10 per cent gain in the six months after, according to data compiled by Bloomberg going back to 2007 ^[9][10]. "These events are important every year, but this one has an even greater level of importance," said Jed Ellerbroek, portfolio manager at Argent Capital Management, which owns Apple shares ^[6]. The event starts at 10:00 a.m. Pacific in Cupertino ^[5], the first launch run by John Ternus, who took over from Tim Cook on Sept. 1 ^[4].

For anyone shipping a hero product into rising input costs, two numbers matter more than the demo. One is the share of next quarter's revenue the hero SKU actually carries: under a fifth, and the launch story and the P&L are being run by different products. The other is where the cost gets absorbed, in list price, in gross margin, or in what ships in the box. Apple's hero SKU is 16 per cent by Morgan Stanley's count ^[12], and the memory bill arrives on the other 84 per cent ^[3].