Wedbush: AI and pent-up iPhone 16 demand outweigh China sales concerns

Tim Cook at a gaming tournament in Apple Taikoo Li, Chengdu

B According to a post by AppleInsider , investment firm Wedbush told its clients it was maintaining its price target for Apple despite what it described as a dire demonstration of its current problems.

In December 2023, Wedbush raised Apple's price target to US$250, due in part to the company's long-term strength as well as its huge user base. Since then, Apple has seen iPhone sales fall further in China and has also canceled the Apple Car.

In the note, the analysts make clear that they are not underestimating Apple's current problems. In particular, they say that after visiting Asia, they witnessed a decrease in iPhone prices due to slow sales.

These slow sales are sometimes exaggerated. But it's true that the iPhone 15 doesn't seem to be as popular in China as the iPhone 14, although Tim Cook partially blames currency fluctuations for that.

Calling the situation grim, analysts also see the cancellation of the Apple Car as bad news because they say it means Apple has wasted a decade on a “long bad bet.” However, they note that the cancellation means Apple can reallocate staff to its artificial intelligence plans, which is one reason the company expects the situation to improve.

Adding artificial intelligence — or at least a more outstanding AI — This is expected to help boost sales. Wedbush already expects iPhone sales to improve with the release of the iPhone 16 lineup as he believes there is pent-up demand for the upgrade.

It was previously predicted that between 220 and 230 million iPhones would be sold in all of 2024. Based on new estimates of demand from those likely to buy the iPhone 16, Wedbush's new note estimates a total of up to 270 million iPhones sold in the year.

Wedbush's pricing for Apple over the years (Source: Wedbush)

Additionally, he notes that Apple's services are strong and digital rates are doubling . Apple also has the strongest customer base of any company in the world, according to Wedbush.

They believe that with 2.2 billion iOS devices in active use, Apple will be able to monetize this base further than it already does.

While Wedbush doesn't go into detail about monetizing existing users, there are plenty of opportunities for Apple to do so. This could help increase the number of users subscribing to Apple TV+, iCloud tiers, or the Apple One package — and this can also increase the cost of each one.

Investment firm Morgan Stanley also recently said that overall the cancellation of the Apple Car is a good move for the company.

Leave a Reply