Apple shares edged higher in early trading but remain in negative territory for the month. Two top Wall Street analysts provided mixed updates on the tech giant's outlook heading into its fiscal fourth-quarter earnings report later this week.
Apple (AAPL) shares have slipped around 0.7% over the past month, a modest but still notable move lower for a company worth around $3.52 trillion. This is as investors track demand for its newly launched iPhone 16 heading into the holiday period.
Apple sees the iPhone 16, which was unveiled in early September, as the conduit for its artificial intelligence technologies, dubbed Apple Intelligence, that it plans to roll out to its 2.2 billion base of devices over the coming years.
Early indications from a host of market research groups, Wall Street analysts, and Apple-focused websites, however, suggest demand for the new smartphone is tracking close to or just below iPhone 15 levels as consumers seem content to wait for more details on the Apple Intelligence rollout and software updates tied to the group's broader AI strategy.
Apple Intelligence 18.1, with limited new features, will be released as a software update this week, with a more comprehensive 18.2 version expected before the end of the year.
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Apple iPhone 16 demand in focus
KeyBanc Capital Markets analyst Brandon Nispel also noted last week that recent third-quarter updates from U.S. wireless carriers, including Verizon (VZ) , AT&T (T) and T-Mobile (TMUS) , showed a 9% year-on-year decline in upgrade rates, which bode poorly for Apple sales in the world's biggest economy.
JPMorgan analyst Samik Chatterjee notes that delivery lead times for the new iPhone 16 lineup have moderated somewhat heading into the eighth week since their September launch, with larger pullbacks in the higher-priced 'Pro' models.
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"While the moderation is slightly higher than at the same point last year, aggregate lead times remain largely in line with those of the iPhone 15, suggesting demand remains resilient, though modestly below last year's level," Chatterjee said.
Chatterjee, who has an 'overweight' rating and a $265 price target on Apple stock, expects Apple to deliver "better-than-expected results for the September quarter but guide below consensus for the December quarter."
"'iPhone 16 series sell-through started slower than the iPhone 15 and, although momentum has picked up in recent weeks, volumes remain modestly below last year’s levels," he added. "As a result, we forecast iPhone revenues in [Apple's fiscal first quarter] to come in below consensus."
Apple AI to lead update 'supercycle'
Apple is scheduled to report its fiscal fourth profits after the close of trading on Thursday. Estimates suggest earnings of around $1.55 a share on revenues of around $94.4 billion.
Wedbush analyst Dan Ives, a longtime Apple bull, thinks the group will not only top Wall Street forecasts for the September quarter but also issue a bullish outlook for the holiday period.
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"We are continuing to see further indications across the Asia supply chain that this iPhone upgrade cycle could be a historical one setting the stage for a supercycle as currently we estimate roughly 300 million iPhones globally have not upgraded in over 4 years," said Ives, who carries a $300 price target and an 'outperform' rating on the stock.
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"In our view, Apple could sell north of 240 million iPhone units in [the current fiscal year] as this AI-driven upgrade cycle takes hold, and this will be the highest iPhone unit sales year in Apple's history," he added.
Apple shares were marked 0.91% higher in early Monday trading to change hands at $233.43 each.
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