Barclays analyst Tim Long maintained an Underweight rating on Apple Inc (NASDAQ:AAPL) with a price target of $186.
Long noted there was much news about increased iPhone builds in early July, a few weeks after the introduction of Apple Intelligence.
Based on the analyst’s recent supply chain channel checks, he noted Apple may just have cut roughly 3 million units of a key semiconductor component in iPhones for the December quarter. If confirmed, this would be the earliest build cut in recent history.
Long’s sell-through checks point to 15% year-on-year declines for global iPhone 16 sales in the first week of sales.
The analyst also tracked iPhone availability globally across geographies, suggesting softer demand for iPhone 16 relative to last year. Wait times across major geographies Long tracked were much shorter versus the previous year.
While the supply chain constraints on iPhone 15 pro models extended lead times last year, Long noted this still points to potentially weaker-than-expected demand, especially across the U.S. and China.
He said the data points indicated a softer demand than previously anticipated.
Overall, possible iPhone build cuts, weak sell-throughs and shorter lead times suggest a softer start to the iPhone 16 cycle with a negative mix shift due to weakening consumer spending, macro pressure and competition, Long said.
He noted Apple Intelligence in the Chinese language will not be rolled out until 2025, which may dampen early enthusiasm for the iPhone 16 in that critical market.
The analyst said Europe is also likely to see a staggered AI launch through 2025, which could limit excitement for the new device.
Long noted Apple’s order cut this time, if confirmed, implies the earliest cut in recent cycles as Apple typically makes its first order adjustment in early to mid-October based on sell-through data points.
Long noted September quarter iPhone units are on track for 51 million as the best case, assuming some channels fill in line or better versus last year due to more selling days. The earlier iPhone launch added two days of sell-through to the September quarter, but this is known, according to the analyst. The analyst noted the July and August sell-through was flattish year-on-year.
The December quarter looks increasingly at risk with the recent order cuts if sell-throughs continue to disappoint. This is due to the staggered roll-out of Apple Intelligence, limited adoption of AI outside of the U.S. and the need for hardware differentiation.
AAPL Price Action: AAPL stock is down 3.19% at $225.57 at publication Friday.
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Photo: Courtesy Apple
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