Apple's Pricey New iPhones Cut Both Ways on Profit

Apple's most expensive iPhone lineup yet may deliver weaker profits than Wall Street expects, according to analysts at Bernstein. The firm argues that sell-side models are not properly capturing how sharply gross margins could compress as the cost of smartphone components climbs.

The warning lands just as Apple has unveiled its new lineup. The company recently showed off higher-priced iPhones in its Pro family alongside its first-ever foldable smartphone, the Duo, MarketWatch's Hannah Pedone reported on September 25, 2026.

The core tension is straightforward. These devices carry premium price tags. But building them has become especially expensive, which means each sale could deliver less profit than investors assume.

Why popularity could become a problem

At first glance, strong consumer demand for the new iPhones would look like unambiguous good news for Apple. Bernstein's analysis suggests the opposite may hold. If the pricier Pro models and the foldable Duo sell in large volumes, the elevated cost of producing them could weigh on Apple's gross margins — a key profit metric — more heavily than current consensus forecasts reflect.

The foldable form factor is a particular pressure point. Foldable iPhone screens are expensive to produce, Bernstein analysts say. That production cost sits at the heart of the firm's concern: the Duo, Apple's first entry into the foldable category, carries bill-of-materials headwinds that premium pricing may not fully offset.

The double-edged sword, as the analysts frame it, is that the very products designed to lift Apple's average selling prices — the higher-priced Pro iPhones and the new foldable — are also the products with the most elevated manufacturing costs. Strong sales would shift Apple's product mix toward devices with thinner margins, potentially dragging down the company's overall profitability even as revenue grows.

What Bernstein says Wall Street is missing

According to the Bernstein analysts cited by MarketWatch, the issue is not demand. It is modeling. The firm suggests Wall Street isn't properly accounting for the extent to which rising component costs could hit gross margins across the new lineup.

That gap matters for investors. Gross margin is one of the most closely watched metrics in Apple's quarterly results, and any shortfall between modeled and realized margins would translate directly into earnings risk. If Bernstein is right, consensus profit estimates for the iPhone cycle may prove too optimistic even in a scenario where the new devices fly off shelves.

The setup inverts the usual logic of a flagship launch. Normally, a strong mix of high-end devices lifts both revenue and margin. This cycle, the cost side of the ledger — driven by expensive components, and foldable screens in particular — may cancel out much of the pricing benefit.

Apple shares were up 1.10% around the time of the report, suggesting the market has not yet priced in the margin risk Bernstein describes. The stock's reaction, and the durability of Apple's gross margins, will hinge on how the actual cost of producing the Pro iPhones and the Duo compares with the prices Apple is charging for them.