Why Apple Stock Dropped Today

Apple shares dropped 2.3% today after Bank of America analyst Wamsi Mohan warned that rising component costs will compress gross margins despite reiterating his buy rating and $380 price target on the stock.

Mohan projects gross margins falling to 36.8% in the third quarter of 2026, then sliding further to 34.1% in Q4 2026 before recovering above 38% in the first quarter of 2027. The near-term margin pressure comes as component suppliers gain pricing power.

The sell-off intensified on valuation concerns. Apple trades at 40 times earnings while the analyst expects only 13% long-term growth, a premium multiple for that growth rate. CEO Tim Cook's planned departure adds leadership uncertainty to the equation.

Bank of America maintained its buy rating despite the margin headwinds, suggesting Mohan sees the compression as temporary based on his outlook for margins rebounding above 38% early in 2027.