What is the market most concerned about the price increase of Apple products across the board? Actually, there are two concerns: high prices kill demand, and price increases push inflation. Let's talk about these two in detail. 1. Why is there a price increase? Naturally, the expansion of AI data centers has led to a shortage of memory and storage chips, resulting in a significant increase in memory and storage products. The core is that AI data centers are competing with consumer electronics for semiconductor supply chain capacity. 2. What is the impact on the market? 1) For the entire consumer electronics industry, if companies like Apple, which have strong bargaining power and supply chain management, start shifting memory/storage costs, other manufacturers (such as PC, game console, mobile phone, tablet, TV, etc.) will also face similar pressures. 2) The market is more concerned with demand Raising prices in the short term is beneficial for protecting gross profit margins, but it will increase the risk of demand elasticity. Apple's high-end users have strong stickiness and lower price sensitivity than ordinary consumer electronics brands, but price increases may further delay the replacement. For Apple, the most crucial thing is not whether it can raise prices, but whether the decline in sales after the price increase is less than the income compensation brought by the increase in single machine prices. The so-called concern about 'price killing demand' is this. It is still difficult to say how much impact it has on demand and how high the proportion of consumers delaying the replacement is. Of course, the market will first price pessimistic expectations and then verify them with future sales data. 3. The market is most concerned about the impact of rising consumer electronics prices on inflation In the past few years, the cooling of inflation in the United States has largely relied on the decline in commodity prices. If consumer electronics prices rise across the board, may core commodity inflation shift from a drag in the past to a support factor? Enterprises may package AI related costs as "product upgrades" and charge consumers. For example, more expensive software subscriptions, more high-end AI function packs, more expensive cloud services, higher Internet/data service prices, etc. These are all issues that we need to face directly. If we take a closer look, the impact is actually quite good, in several aspects: 1) The weight of consumer electronics prices in CPI is very small, according to data from the Bureau of Statistics of the Ministry of Labor, the weight of information technology goods is 0.746%. Computer Software and Accessories accounted for approximately 0.035% of the core CPI in March 2026, but approximately 1.2% of the core PCE. This means that the overall price of consumer electronics will increase by 20%, and the impact on the general CPI will be around 0.15%. The impact on core PCE is 0.24%. 2) Software, cloud services, AI subscriptions This is an easily underestimated part, where companies convert computing power costs into subscription fees or feature package prices. CPI and PCE currently do not have a separate subscription sub item, and personal software subscriptions may enter "Computer Software and Accessories". Non online services such as personal cloud storage and file hosting are more likely to enter the "Internet service and electronic information provider" in CPI In CPI The price increase of pure software is almost unimportant: Software prices have risen by 10%, with a broad CPI pull of approximately 0.003 percentage points. Internet services rose by 10%, broad CPI by about 0.09 percentage points, and core CPI by about 0.11 percentage points. Communication services are larger: telephone services have increased by 10% overall, with a broad CPI pull of about 0.14 percentage points and a core CPI of about 0.18 percentage points. In other words, it is not the "software" itself that is really worth watching in CPI, but whether the price of Internet services, wireless communications, broadband/package will rise. In PCE The software weight is significantly higher than CPI, and there is a big difference here. The Fed previously pointed out that "Computer Software and Accessories" accounted for only 0.035% of the core CPI in March 26, but 1.2% of the core PCE. The Fed explained that this comes from the difference in weighting methods between CPI and PCE: CPI uses consumer spending surveys, while PCE/BEA leans more towards supply side and enterprise shipment data PCE software/accessories account for approximately 1.2% of core PCE and approximately 4.9% of PCE core goods. From a broad perspective, the price increase of software, cloud, and communication services together has a significant impact. Software, Internet access and telecommunication services in PCE account for 2.8% of core PCE. If they generally rise by 10%, the core PCE mechanical pull will be close to 0.28 percentage points. This is no longer noise for the Fed. 4. What about the impact of AI infrastructure on inflation? My personal opinion is that the AI infrastructure boom will push up certain sub items, but it may not necessarily lead to comprehensive inflation, which depends on the transmission path. The path through which AI infrastructure is transmitted to inflation is: The main paths are the increase in electricity prices, the increase in memory server chip prices, the increase in software cloud service AI subscription prices, and the increase in construction, land, and public utility costs for enterprises to transfer costs. The second and third paths have been discussed in detail earlier. The construction of large-scale data centers in the fourth path will drive up capital expenditures for construction labor, engineering services, transformers, switchgear, cooling equipment, cables, copper, steel, land, water resources, and local public utilities in some areas. These will not directly enter CPI The core is the first electricity price, which is also an important energy cost. The direct impact of electricity prices on generalized CPI/PCE is much greater than that on consumer electronics: a 10% increase in electricity prices would increase generalized CPI by about 0.25 percentage points and generalized PCE by about 0.13 percentage points; But it does not directly enter the core CPI/core PCE, and energy is not within the weight of the core CPI and PCE. Overall, the rise in consumer electronics prices has limited impact on CPI/PCE; The AI infrastructure boom that is truly worth paying attention to is starting to spill over from the "enterprise capital expenditure story" and drive up prices of "electricity, cloud services, software subscriptions, and core commodities". This is also the worst-case scenario discussed in the tweet on the 24th: the downward speed of inflation is not fast, and it has even dropped to a certain level (in the range above 2%) and entered the platform period. The AI infrastructure is driving the economy and there is a trend of overheating. This also means that electricity prices, software, cloud services, communication services, and enterprise cost transfer will all rise together, and the market's concerns about inflation and the Fed's interest rate cut path will significantly increase. But looking at several factors together: Oil prices are declining; Labor force weakness; AI infrastructure may drive up prices for some electricity and cloud services; It is not advisable to make big moves before the end of the year when the Walsh Task Force proposes a framework; It was also mentioned before that the probability of remaining inactive within the year is the highest. So the core is to see how fast the decline in oil prices will drive the decline in energy, and how weak the labor market will be after the "World Cup effect". And what is the hedging effect of AI infrastructure driving some price increases. 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