Apple shares edged lower again Wednesday, pinning the stock near the lowest levels in a month, even as a top Wall Street analyst sees an impending ‘super-cycle’ of iPhone upgrades tied to the tech giant’s AI push.
Apple (AAPL) shares have been under pressure for much of the past month, and have extended declines since the launch of its iPhone 16 on September 10, amid concerns that the slow rollout of AI-powered features on the flagship device would blunt demand for new purchases and upgrades.
Reports of quicker lead times for new iPhone 16 orders, which can be a good proxy for measuring the balance between Apple’s supply plans and consumer demand, has also suggested muted early uptake for the new handsets, which went on general sale this week and are priced largely in-line with last year’s models.
Taiwan-based Apple analyst Ming-Chi Kuo, meanwhile, reported earlier this week that Apple sold an estimated 37 million new iPhone 16 units in its opening weekend, down around 12.7% from the first days after last year’s iPhone 15 launch.
Apple’s new iPhone 16 will include new AI-powered features rolled out over the coming weeks and months.
Demand for the new iPhone series could prove crucial for the broader AI investment thesis, as Apple is seen as the best-placed tech group to to deliver the new technology at the consumer-facing level through its 1.4 billion user base.
Super-cycle ‘when not if’
Morgan Stanley analyst Erik Woodring, however, thinks iPhone lead times don’t carry the predictive power that investors sometimes assume, and continues to see a big uptick in demand over the near term.
“Historically, first 2-week lead times are directionally predictive of next 12-month shipments at the model level, but they don’t provide much insight into December-quarter iPhone build revisions or total iPhone shipments,” Woodring said in a note published Tuesday.
Related: Apple stock slides as big iPhone 16 bet sputters
Woodring also reiterated his ‘buy’ rating and $273 price target on Apple stock, a level that suggests 26% upside for Apple stock over the next 12 months.
“What’s more important is how iPhone 16 lead times trend over the next 10 days,” he added. “We see near-term stock downside to $200, which we’d be buyers of, given that the multi-year upgrade cycle is a ‘when, not an if’,” he added.
Evolution or revolution?
CFRA senior equity analyst Angelo Zino also argues that iPhone early iPhone leads times aren’t a reliable demand indicator, noting the small sample size and time horizon that could skew the data set.
Zino sees “mid-to-high single-digit percentage growth” in iPhone 16 and iPhone 17 says, but thinks the uptake will “not be a super cycle” but rather an “evolutionary one that will take several cycles to witness the true benefits.”
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“We are disappointed by the lack of high-end pricing changes and limited AI roll-out details while we await how aggressive telcos will be with promotions. The event provided no major catalyst,” said Zino, who kept his ‘buy’ rating on Apple stock unchanged in a note published Tuesday.
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Apple will publish its fiscal fourth quarter earnings report on October 31, with early estimates suggesting revenues of $94.4 billion and earnings of around $1.60 per share.
Apple shares were marked 0.38% lower in premarket trading to indicate an opening bell price of $215.97 each.
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