Apple shares fell nearly 3 percent on Wednesday following a report from analyst Ming-Chi Kuo, indicating a significant reduction in iPhone 16 orders by 10 million units. The decline is attributed to a lack of consumer demand for the new models, particularly as expectations for a boost from Apple’s AI features have not materialised.
About the Company
Apple Inc. is an American multinational technology company that evolved into a leader in consumer electronics, software, and services. While Apple has made notable advancements in artificial intelligence, there are several criticisms and concerns regarding its approach and offerings in this rapidly evolving field.
Price Movement
Apple Inc’s shares fell 2.2 percent during Wednesday’s trading session, falling to $230.76 from a previous close of $235.86. Apple shares reached its all-time high of $237.49 before paring gains, eclipsing its prior record of $237.23 on July 15.
The stock’s climb put it further ahead of Nvidia (NVDA) as the world’s most valuable company after Nvidia’s gains earlier in the week jeopardized the iPhone maker’s lead.
Reason for the Fall
Apple shares dropped on Wednesday after supply chain analyst Ming-Chi Kuo reported that the company has reduced iPhone 16 orders by approximately 10 million units for Q4 2024 and the first half of 2025.
Kuo indicated that the cuts primarily impact the standard iPhone 16 models, rather than the iPhone 16 Pro versions, which feature superior displays and cameras and have been more popular among consumers.
As a result, Kuo now estimates iPhone 16 production for the second half of 2024 at 84 million units, down from his previous forecast of 88 million.
Kuo now predicts Apple partners will produce 80 million iPhones in the fourth quarter, a drop from about 84 million last year. For the first quarter of 2025, he estimates production at 45 million units, down from 48 million, and 39 million units in the second quarter, down from 41 million.
Kuo noted that “iPhone revenues are expected to face pressure in the first half of 2025 due to a YoY shipment decline and a less favourable product mix,” driven by the launch of the iPhone SE 4, which he expects Apple to release in December. The SE models are typically Apple’s most affordable and are not updated yearly.
Lack of AI demand
Kuo noted that Apple’s AI features, branded as Apple Intelligence, aren’t yet driving iPhone upgrades. He pointed out that the drop in iPhone orders suggests no immediate impact on shipments from AI.
Although Apple launched its new iPhones last month, the first software updates introducing Apple Intelligence won’t arrive until later this month, with some features delayed until later this year.
Financial Performance
In its latest financial update, the company reported remarkable net sales of $85,777,000 Million in the quarter ended June 2024, reflecting a 24 percent YoY increase from $81,797,000 Million in the quarter ended June 2023. Moreover, EPS (Earning Per Share) surged 10 percent to 1.40, compared to 1.27 in the same period.
Written by – Siddesh S Raskar
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