Apple stock fell Monday after several analysts said iPhone 16 preorders were lower than expected.
In a blog post, TF International Securities analyst Ming-Chi Kuo said iPhone 16 preorders of about 37 million units were down 12.7% from last year's first-weekend sales of the iPhone 15 series.
"The key factor is the lower-than-expected demand for the iPhone 16 Pro series," he said. Plus, a major selling point of the iPhone 16, Apple Intelligence, will not be available when the new smartphones come out.
Kuo also cited intense competition in the Chinese market hindering iPhone demand.
Apple began taking preorders for the iPhone 16 series handsets last Friday, with in-store availability this upcoming Friday.
Apple Stock Retreats On Preorder News
On the stock market today, Apple stock sank 2.8% to close at 216.32.
Chipmakers heavily exposed to Apple's iPhone business also fell. Cirrus Logic plunged 6% to 125.22. Skyworks Solutions slid 5.1% to 97.25. Qorvo dropped 6.7% to 100.46.
Ahead of the iPhone 16 launch, many analysts had forecast a supercycle of upgrade activity. Analysts expected the AI-enabled smartphones to be a big draw for consumers.
However, Apple's take on artificial intelligence, branded Apple Intelligence, will come as a software update in October. And AI features will be limited initially, with more rolled out in the months ahead.
Also, Apple Intelligence at first will be available only in English in the U.S., with other English-speaking geographies added in December. Apple plans to add support for Chinese, French, Japanese and Spanish in 2025.
In a client note, JPMorgan analyst Samik Chatterjee said iPhone 16 Pro preorders were "modestly slower vs. last year." Meanwhile, preorders for the standard iPhone 16 models were in line with last year's iPhone 15 launch, he said.
Chatterjee rates Apple stock as overweight, or buy, with a price target of 265.
Soft Start For iPhone 16 In China
In China, overall iPhone 16 preorders were down compared with last year, Barclays analyst Tim Long said in a client note.
"Early preorder data from China points to a softer start to the iPhone 16 cycle, with a negative mix shift due to weakening consumer spend, macro pressure and competition," Long said. "The rollout of Apple Intelligence in Chinese language is not until 2025, which may dampen early enthusiasm for iPhone 16."
Long rates Apple stock as underweight with a price target of 186.
Wait Times Could Be Supply-Related
The shorter wait times for the iPhone 16 Pro handsets this year are likely due to Apple building more premium handsets this cycle, BofA Securities analyst Wamsi Mohan said. Mohan rates Apple stock as buy with a price target of 256.
"Though the extension of ship dates can be reflective of iPhone demand, other factors such as supply, inventory, allocation and pricing could be impacting the ship dates," Mohan said in a client note.
Evercore ISI analyst Amit Daryanani concurred with that assessment. "It is always unclear if delivery times are more a reflection of supply or demand," he said in a client note.
Demand for Apple's pricier iPhone 16 Pro models appeared to be strongest in the U.S. and U.K. where Apple Intelligence will be available sooner than other markets, Daryanani said. "We continue to expect a 'stronger for longer' iPhone cycle given the staggered nature of the Apple Intelligence rollout," he said.
Daryanani rates Apple stock as outperform with a price target of 250.
Apple stock is on the IBD Tech Leaders list.
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
