Apple stock (AAPL) - Get Free Report investors must be really confused at this point. Conflicting information regarding the performance of the iPhone in the next few months continues to pour in. After all, how is the segment expected to perform through the holiday season and into 2023?
The most recent data point is encouraging – maybe not to recognized sales in fiscal Q1, but certainly to consumers’ interest for Apple’s flagship product.
According to UBS, lead times for the iPhone, especially the Pro models, continue to increase. Even if the Cupertino company has been facing supply challenges lately, at least demand for the company’s smartphones seems to be on fire still.
Apple’s iPhone: a hot commodity
Analyst David Vogt cited his firm’s Evidence Lab data to claim that “wait times for Apple's iPhone 14 lineup have continued to move higher in the wake of supply issues out of China and continued strong demand.”
The analyst provided some specific numbers. For example, the wait time for the Pro and Pro Max in the US has reached 34 days. The last time that I checked, only about a week ago, this number was lower (but still historically high) at 31 days.
In China, wait times have reached 36 days. This is an increase of 10 days in only one week.
iPhone: the pros and the cons
Apple is facing a unique problem that I bet most consumer product companies would not mind dealing with: too much demand relative to how much the tech giant can produce and deliver.
This is the good news: there does not seem to be any concern about consumers’ willingness to buy, pay, and wait for a new iPhone. The “super cycle” seems alive and well, even well past the pandemic-driven spike in demand witnessed last year.
The bad news might not be that bad after all. The main issues are production capacity and delivery speed, particularly from assemblers in China. But these problems are likely to be resolved, given enough time. Don’t forget that Apple is the king of inventory management and supply chain.
The key question, one that is hard to answer, is whether missed opportunities to sell in the 2022 holiday quarter will only push those transactions forward another quarter or two, or if they will be lost forever. In 2020, when COVID-19 disrupted supply channels following the launch of the iPhone 12, the former proved to be true – and Apple stock marched higher.
Analysts have been taking both sides of the debate this time: Wedbush’s Dan Ives seems to be more optimistic, while Bernstein’s Toni Sacconaghi is skeptical. Time will tell who on Wall Street has gotten the story right.
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