Apple can’t seem to shatter its own iPhone glass ceiling, and Wall Street is throwing rocks.

In a note to clients shared on Monday, Jefferies analyst Edison Lee wrote that an examination of the company’s supply chain checks reveals that it has likely scrapped plans for a much-rumored and eagerly anticipated “all-glass iPhone,” and slapped the company’s stock with a downgrade from a “hold” to a sell-equivalent “underperform” rating. It’s just the latest signal that incoming CEO John Ternus, set to take the top job at the start of next month, is inheriting something of a supply chain mess.

Hold the Phone

Apple’s iPhone 18 Pro and 18 Pro Max are expected to launch next month, and everyone is anticipating predictably incremental upgrades for the company’s flagship device. But next year marks the 20th anniversary of the very first iPhone, and most Apple onlookers and enthusiasts had expected the Cupertino, California-based company to deliver at least two radical reinventions of the generationally important smartphone: an all-glass version and a foldable version.

The former, argues Jefferies’ Lee, would have been crucial to Apple’s efforts to sell iPhones at a higher average selling price (ASP) over time; the all-glass version, likely scrapped due to low production yield, was widely estimated to carry a retail price of $2,060. That would be higher than any other iPhone, and Lee hypothesized that Apple would eventually introduce all-glass iterations as the ultra-premium tier of all its Pro and Pro Max iPhone lines. The foldable, estimated to run for $2,199, “will now be the only key driver of higher ASP and margin,” Lee wrote, though he conceded it would likely be a “niche” product at that price point.

In the meantime, Apple is struggling with runaway costs from soaring memory prices eating into the margins of its existing product lines:

• Apple has already raised the price of its Mac and iPad lines, and some suspect that a similar hike will arrive for the iPhone along with the forthcoming 18 model. According to recent TrendForce Data, a 256-gigabyte iPhone 18 Pro costs Apple 38% more to manufacture than the comparable previous model because of rising memory costs, destroying a longtime strategy of fattening profit margins by offering more storage at a steep markup.
• According to a report in The Wall Street Journal, Apple is now appealing directly to the White House for approval to use components from blacklisted Chinese memory-maker CXMT. Sources told The New York Times that officials are largely unsympathetic to the request.

Not Liking Them Apples: Jefferies is joining an increasingly large and increasingly dour choir on Wall Street with its newfound Apple skepticism. Six firms now hold a sell-equivalent rating on Apple stock, according to Bloomberg data, matching the highest level since 2012. Less than 60% of analysts now hold buy-equivalent ratings, way less than the 90% approval rating most megacap peers hold.

Archer Aviation is the latest company to figure out the best offense is a pivot to defense.

Shares in the air taxi developer entered Monday down more than 25% this year. Then, the company announced that Boeing agreed to divest three units, including one specializing in military drones, in exchange for an almost 20% stake. Shares in Archer rocketed 12% on the day.

It’s Accrual World

Since its founding in 2018, Archer has been at the forefront of efforts to make urban air-taxi networks, once the stuff of The Fifth Element and Blade Runner, no longer a strictly cinematic experience. With a market cap of roughly $4.8 billion, the company expects its electric vertical takeoff and landing aircraft, or eVTOL, to lift off in Texas, Florida and New York later this year as part of a White House pilot program. It also bought a Los Angeles-area airport last year for $126 million, with plans to operate an air taxi service for the 2028 LA Olympics, pending regulatory approval for commercial operations.

There are obstacles. The Federal Aviation Administration hasn’t yet certified any eVTOLs for commercial flights, and Archer rival Joby Aviation is further along in the approval process. Joby also has revenue, having reported $38.6 million in the second quarter last week, up from $24.2 million in the first quarter. On Monday, Archer reported just $5 million in revenue during the second quarter, up from $1.6 million in the first three months of the year. That’s less than the $6.1 million Blade Runner made during its opening weekend in 1982.

The vast majority of Joby’s revenue ($36.2 million) came from an acquisition, the helicopter and seaplane rideshare business it purchased from Blade last year. That means, until the FAA says otherwise, Archer’s main cash generator, like Joby’s, will be an acquired unit:

• Insitu, one of the three units to be acquired from Boeing, makes civilian and military drones and has supplied the US, UK and Ukrainian forces. It generates roughly $200 million in annual revenue and is profitable, Archer said.
• The other two units are Wisk Aero, another air taxi developer, and SkyGrid, an air-traffic software developer. All three will work with Zee, Archer’s AI model purpose-built for aviation.

Rally of the Rivals: Joby and Archer are eyeing commercial operations, and thus implicitly FAA approval, at some point between late 2026 and mid-2027, the arrival of which would likely send all stocks in the sector on an upswing.

Mark Zuckerberg is making moves to be the AI guy — not the social media guy or the metaverse guy. Meta on Monday unveiled the parameters of its new AI model, Muse Glimmer, and CEO Zuckerberg published 6,500 words of AI musings.

Zuck asks AI companies to take down their gates so the tech’s top secrets won’t be restricted to a handful of institutions. He discourages AI doomers, instead taking an optimistic view of AI’s future — but only if AI becomes more open to both developers and anyone who wants to, as Zuck’s personal example goes, build a robot with their dad.

Share It With the Rest of the Class

Zuckerberg wants AI-makers to let everyone copy their homework, and Meta is leading by example. Developers can download the parameters or “weights” of Muse Glimmer and tweak them as they please, meaning the model is “open.” Meta said it plans to release the parameters of a version of its main Muse Spark model soon, too. The top AI models from OpenAI and Anthropic, by contrast, are under lock and key.

While Zuck frames the switch to open-source as a philosophy for everyone’s best AI future, it also may make more business sense for Meta than its rivals:

• ChatGPT surpassed 1 billion monthly active users earlier this year, according to Sensor Tower estimates. Meta has said its AI also has more than 1 billion users, but analysts have questioned the stat since Meta’s AI is embedded into its family of popular apps. Meta has also fallen behind Anthropic and Claude when it comes to coding, writing and other benchmarks.
• Zuckerberg also pushed for people to rethink their negative opinions on “distillation,” when one model is trained on another. Anthropic in June accused China’s Alibaba of using distillation to train its Qwen AI model, sparking a debate about whether the practice amounts to IP theft.

Heart on His Sleeve: One of Zuck’s shirts reads, “Aut Zuck Aut Nihil,” or “all Zuck or all nothing.” Zuckerberg is going all-in on his AI optimism, with Meta planning to spend as much as $145 billion on the tech this year. But he could be feeling added pressure to make AI a success after the last time he went “aut Zuck,” when his expensive bet on the metaverse didn’t live up to the hype.