Apple shares have risen 4.2% since the launch of the iPhone 16, and analysts say it has room to rise 8% as falling manufacturing costs boost profit margins in Cupertino – Bank of America (NYSE: BAC), Apple (NASDAQ:AAPL)

Apple’s AAPL Latest manufacturing costs iPhone The product lineup shows promising margin trends, according to a new analysis from Bank of America.

The teardown study reveals significantly lower costs for the Pro model while highlighting the company’s strategic pricing approach across its product range.

Apple analyst: Bank of America analyst Vamsi Mohan Maintain a “buy” rating on Apple with a target price of $256, an increase of nearly 8% from Wednesday’s closing price.

Apple paper: Teardown analysis by Bank of America shows significant improvements in manufacturing costs for the iPhone 16 Pro models, while costs have increased for the base model.

Analysts emphasized that iPhone 16 Pro Max The manufacturing cost is 5% lower than the previous generation product, and the gross profit margin is increased by approximately 320 basis points. After adjusting for memory costs, year-over-year savings increase to 8%.

The analysis states: “At Apple’s size, these measures could collectively save $3.7 billion across 250 million iPhones, which could result in a more than 100 basis point boost to product general managers when fully launched.”

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Key findings:

• Major electronic components account for 50% of the manufacturing cost of the iPhone 16 Pro Max, which is higher than the 47% of the iPhone 15 Pro Max.

• Manufacturing costs for the base iPhone 16 increased by 10% compared to the iPhone 15, mainly due to improvements in AI processing and cameras. After adjusting for memory costs, this increase narrowed to 6%.

• Save at least $10 on every iPhone by purchasing a baseband modem in-app Qualcomm Qualcomm.

• Vertical integration efforts can further drive margin improvements. The company spends about $250 on the integrated circuits of each iPhone 16 Pro Max, creating cost-saving opportunities through in-house purchase of components.

Why it’s important: The findings support Bank of America’s broader thesis about Apple’s profit resilience. The bank expects a strong iPhone upgrade cycle in fiscal 2025 and fiscal 2026, driven by hardware demand for generative AI capabilities.

Despite the addition of features, Apple’s gross profit margin has been trending upward over the past few years, supported by its services mix and iPhone profit stability.

Apple shares have risen nearly 30% in the past year, trading at $237.87. Apple is scheduled to announce its first-quarter 2025 financial results on January 30.

Price Action: Apple shares rose 1.97% on Wednesday to close at $237.87. In after-hours trading, it edged up another 0.31% to $238.60, according to Benzinga Pro.

Based on assessments from 30 analysts, Apple’s consensus price target is $245.17, with the highest target set by Wedbush on December 26 being $325. This represents a potential downside of 1.65%.

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