iPhone demand remains high despite slowing tech market, analysts say

According to Wedbush analysts Daniel Ives and John Katsingris, iPhone demand this quarter remained “surprisingly resilient” despite widespread supply chain issues and other factors affecting the tech industry.

Apple iPhone 13 2022 color range
Summarizing their research findings in a new note to investors, market analysts said Apple’s flagship devices have held up well despite “widespread technology compression” and fears of slowing growth, as evidenced by the drop in Apple’s share price.

The June quarter albatross in our conversations with investors over the past month has understandably been the Covid lockdowns in China, which will negatively impact revenue by $4 billion to $8 billion as a headwind depending on the indications from Cook & Co. given last month.

Right now, we think iPhone demand is holding up better than expected (despite the various supply issues that have plagued Apple and the rest of the tech industry) and trending better than management forecast. so far in the quarter.

Apple last month said lockdown disruptions in China and silicon shortages would continue to make it difficult to manufacture enough products to meet strong consumer demand as the year progressed, and that would ultimately affect revenue. Apple in the June quarter.

Wedbush said blockages and supply chain issues should be of “maximum concern” in the June quarter, but would then ease in the key September and December quarters on the heels of the launch of Apple’s iPhone 14.

We believe the initial bogey and production plans for the iPhone 14 should be slightly higher than the iPhone 13, signaling Apple’s confidence that pent-up demand for this next version remains healthy. despite the macro nerve.

Wedbush analysts say the rigidity of Apple’s upgrade cycle is underestimated by investors and that Apple’s installed user base will be key to iPhone 14 sales this year, with nearly a quarter of a billion iPhones in general circulation have not been upgraded for about 3.5 years.

Adding to this edge Apple holds over its rivals, Wedbush expects Apple’s services business to account for around $80 billion in annual revenue this year and is expected to grow at a “steady double-digit clip.” through 2023. “We believe that Apple’s services business alone is worth north of $1 trillion, which, coupled with the flagship computing hardware business, makes the risk/risk ratio very attractive reward at current levels,” the analysts said.

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