Apple’s (NASDAQ:AAPL) new AI-driven iPhone is expected to boost the tech giant’s growth, but it might be wise to temper expectations.
That’s the takeaway from Barclays analyst Tim Long, the Street’s biggest Apple bear, after reviewing the initial iPhone shipment data from China.
The analyst mentioned that pro model orders dropped by double digits year-over-year, while base and plus models experienced y/y growth.
Additionally, as noted above, Apple Intelligence doesn’t launch in the Chinese language until calendar year 2025 while weak macroeconomic conditions and rising competition are still putting pressure on iPhone sales.
To wit, in an effort to drive demand for the iPhone 15, Apple had to offer significant price discounts of around 20%.
Long also notes that delivery times for pro models were shorter compared to last year.
As Apple typically adjusts its initial orders in early October based on sell-through data points, sell-through remains a critical metric.
Long estimates September quarter iPhone shipments to be around 51 million units, due to the additional selling days.
The average price target sits at $249.46, suggesting shares will climb 15% higher over the next 12 months.
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While the tech giant’s growth is anticipated to be bolstered by its new AI-driven iPhone (NASDAQ:AAPL), it may be prudent to lower hopes.
Following his examination of the first iPhone shipment data from China, Tim Long, an analyst at Barclays and the largest Apple skeptic on the Street, concluded as much.
As a result of declining consumer spending, macroeconomic pressure, and competition, the 5-star analyst stated that early pre-order data from China indicates a softer start to the IP16 cycle and a negative mix shift. “Apple Intelligence will not be available in Chinese until CY2025, which could stifle initial excitement for IP16. “.
After analyzing pre-order data from significant Chinese e-commerce platforms and speaking with industry insiders, Long saw a decrease in total pre-orders in the first few days compared to the previous year as well as a decrease in the percentage of pro models. The analyst stated that orders for the pro model decreased by double digits year over year, but orders for the base and plus models increased year over year.
Furthermore, as previously mentioned, Apple Intelligence won’t be available in Chinese until 2025, despite the fact that weak macroeconomic conditions and increased competition are still driving down iPhone sales. Essentially, Apple needed to give steep price cuts of about 20 percent in order to stimulate demand for the iPhone 15.
In addition, Long mentions that pro model delivery times were quicker than they were the previous year. The analyst commented, “We understand that there is a greater supply of IP16 due to a higher production yield, but we also think that a decrease in the demand for pro models contributed to lower delivery times.”.
Sell-through is still an important metric because Apple usually modifies its initial orders in early October based on these data points. Although this factor is mostly accounted for, the earlier iPhone launch adds two extra days of sell-through to the September quarter (11 days for the iPhone 16 compared to 9 days for the iPhone 15). Because of the extra selling days, Long projects September quarter iPhone shipments to be in the range of 51 million units. “But if sell-throughs fall short of expectations, Dec-Q builds could be jeopardized,” he continues. We also heard that some suppliers of iPhones have. “.
Therefore, what does this ultimately mean for investors? Long’s conclusion is that AAPL will continue to be an Underweight (i.e. e. Sell), implying that the shares will lose 14% of their value over the course of the following year at his $186 price target. You can click this link to view Long’s track record.
But Long is by himself in his pessimistic outlook. A consensus rating of Moderate Buy is the result of the additional 22 Buys and 9 Holds from the remaining analysts, who have more optimistic views. The average price target, which is $249.46, indicates that shares will increase in value by 15% over the following 12 months. Refer to the AAPL stock projection.
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Disclaimer: This article only represents the featured analyst’s opinions. The only intended use for this content is informational. Before making any investments, it is crucial that you conduct your own research.
