Apple shares edged lower in early Wednesday trading, leaving the stock in negative territory for the month, amid increasing concern that demand for its new iPhone 16 is trailing Wall Street forecasts while China sales continue to suffer in the face of increased competition.
Apple (AAPL) , which unveiled its latest iPhone model earlier this month, is looking to use it as a launchpad for a host of artificial-intelligence initiatives, dubbed Apple Intelligence, that it plans to infuse across its 2.2 billion user base.
The various AI-powered tools, however, will be rolled out only gradually over the coming months, and only in certain markets, as Apple grapples with development challenges, regulatory pressures and increased competition in the global smartphone market.
That appears to be hurting early iPhone 16 demand, with reports of shorter lead times, a measure of the time needed to make and fill a consumer order, when compared with previous handset launches.
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Taiwan-based Apple analyst Ming-Chi Kuo, whose reports are closely tracked by Wall Street, reported that Apple sold an estimated 37 million new iPhone 16 units in the opening weekend following its Sept. 9 reveal. That figure was down around 12.7% from the first days after last year's iPhone 15 launch.
Earlier this week, JP Morgan analyst Samik Chatterjee said base-model iPhone 16 demand was tracking at levels similar to those of last year. But he noted lower levels of interest in the higher-priced Pro models.
iPhone 16 demand in focus
Analysts at UBS have also reported shorter iPhone lead times, using what they call the "UBS Evidence Lab data, which tracks iPhone availability across 30 geographies."
They said the figures indicate "that the situation has not improved, and we are increasingly concerned, especially about the high-end models."
"If demand does not improve, the 6% iPhone revenue growth embedded in Visible Alpha Consensus for the December quarter (with the market being >6%) appears to be at risk in our view," the bank added.
Related: Top analyst revisits Apple stock price target amid iPhone 16 debate
Morgan Stanley analysts, meanwhile, noted Wednesday that lead times were following "following the same trajectory but tracking lower than the past three iPhone cycles," based on data from the first 11 days after preorders.
"While supply is improved, and we hear anecdotes of positive iPhone 16 demand, we interpret these data points cautiously, suggesting they may have limited predictive power over the full cycle," Morgan Stanley added. "We still expect any potential iPhone build revisions to come in early-to-mid October."
In China, sales of foreign-made smartphones slump
Data from China, published Wednesday, also underscored a growing concern for legacy iPhone demand in China, where foreign-made smartphone sales fell 12.7% in August, even as overall sales rose 26.7% to 24.05 million.
The figures, released by the China Academy of Information and Communications Technology, followed the release of Huawei's Mate XT foldable smartphone. The report also followed Apple's disappointing third-quarter sales from the world's biggest market, where sales fell 6.5% to $14.73 billion over the three months ended in June.
Related: Apple stock slides as big iPhone 16 bet sputters
Apple is scheduled to report fiscal-fourth-quarter earnings on Oct. 31, with early estimates suggesting earnings of around $1.60 a share on revenue of $94.4 billion.
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At last check Apple shares ticked 0.83% lower in mid-day trading and changing hands at $225.59 each.
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