AAPL Takes a Hit as Analyst Predicts iPhone 16 Orders Down by 10 Million Units

Wall Street's Speculations Versus Independent Analysis

While numerous Wall Street banks are busy trying to outdo each other with speculative estimates on the sales of the yet-to-be-released AI Siri-powered iPhones from Apple, one independent analyst stands out. This analyst, known for his accurate predictions, has a significant influence on the stock market. Ming-Chi Kuo from TF International Securities, a well-known Apple analyst, is the one in question.

Impact of Kuo's Prediction on AAPL

The recent drop in AAPL to session lows is attributed to Kuo's prediction that iPhone 16 orders have been reduced by approximately 10 million units for the period 4Q24–1H25. This reduction primarily affects the non-Pro models. Consequently, the estimated iPhone 16 production for 2H24 has been revised to 84 million units, down from the previous estimate of 88 million units.

Revised Production Forecasts

Following these reductions, the total iPhone production for 4Q24, 1Q25, and 2Q25 is now projected to be around 80 million, 45 million, and 39 million units respectively. These figures represent a year-on-year decrease compared to the 84 million, 48 million, and 41 million units produced in 4Q23, 1Q24, and 2Q24 respectively. Furthermore, mass production of the iPhone SE4 is set to commence in December 2024, with an estimated production of approximately 8.6 million units from December 2024 to 1Q25.

Kuo's Analysis and Conclusions

Kuo's analysis suggests that the impact of the production cuts may not be fully reflected in Apple's iPhone revenue for 4Q24. This is due to a larger gap between production and sell-through in 4Q23 compared to 4Q24, and a more favorable product mix in 4Q24 with increased production of the Pro Max model. However, iPhone revenues are likely to face pressure in 1H25 due to a year-on-year shipment decline and a less favorable product mix following the launch of SE4.

Kuo further predicts that most iPhone suppliers will start feeling the pressure from late 4Q24, with a more significant impact in 1H25. Despite some market participants' optimism that Apple Intelligence could significantly boost iPhone shipments, Apple's recent order cuts suggest this may not happen in the short term. Kuo remains confident about the long-term potential for Apple Intelligence to become a popular paid service. However, he believes significant growth in iPhone shipments will require further hardware innovation alongside this AI development.

Immediate Stock Market Reaction

The stock market reacted immediately to Kuo's predictions, impacting both the Nasdaq and the broader market. This was especially noticeable given that Nvidia also experienced a significant drop on the same day.

Bottom Line

While Wall Street banks continue to speculate, independent analysts like Ming-Chi Kuo offer detailed and fact-based predictions. These predictions not only impact the stock market but also provide valuable insights into the future of tech giants like Apple. What are your thoughts on Kuo's predictions and their impact on the market? Share your thoughts and this article with your friends. Also, remember to sign up for the Daily Briefing, which is delivered every day at 6 pm.