Top Apple analyst says to expect demand for iPhone 15 line to drop off from iPhone 14

Top Apple analyst says to expect demand for iPhone 15 line to drop off from iPhone 14
TF International's Ming-Chi Kuo might be the most well-known Apple analyst around. In his latest post on Medium, Kuo lays out some expectations he has for Apple's fiscal third quarter earning report which is due tomorrow after the market closes. In his analysis, Kuo also reveals that based on "market" expectations, unless the iPhone 15 line experiences heavier demand after its release (which should come next month), the demand for the latest iPhone iteration will be below that of the iPhone 14 line.

While Kuo doesn't mention why the consensus forecast is so dour for the iPhone 15 series, a rumored price hike on the Pro models (by as much as $200 for the iPhone 15 Pro Max) could be one of the reasons. The big upgrade for the iPhone 15 Pro Max is the expected addition of a periscope lens which should allow the phone to deliver up to 5x-6x optical zoom from the current 3x for the iPhone 14 Pro Max. Another hike in battery life across the line is also rumored.

Big changes are coming to the non-Pro iPhone 15 models this year while the Pro lines gets a cutting-edge chipset

The bigger changes appear to be coming to the non-Pro models as the iPhone 15 and iPhone 15 Plus will both get the Dynamic Island this year and a major upgrade to a 48MP Wide main camera on the back. But the Pro models will be the first (and possibly only smartphones) to be powered by a 3nm chipset which means more transistors, better performance, and improved energy efficiency. All of the models will sport a USB-C port on the bottom to replace the proprietary Lightning port.

Some analysts expect Apple to announce more integration between AI and some of its products during its earnings call tomorrow. Kuo shuts this down by pointing out that the company is well behind others when it comes to developing generative AI and as a result, he doesn't see Apple discussing it much when talking to the media and analysts tomorrow. As for the actual report, which is usually released around 5 pm ET after the market's regular trading session has been closed for an hour, Kuo doesn't expect any fireworks from Apple.

Kuo says that by topping Wall Street expectations for the fiscal Q3, Apple's shares could show short-term stength

The analyst points out that the fiscal third quarter, which covers the period from April through June, is what he calls "off-season" for the company and he says that it "is the transition period between legacy and new iPhones, so usually the financial results and guidance at this time are usually not attention-grabbing."

As for those with a personal financial interest in seeing Apple's shares rise, from a technical standpoint the stock is running into resistance (selling pressure) close to the 52-week high which is $198.23. Breaking out past the old high could be a bullish sign for the stock. For this to happen, Kuo says Apple's earnings per share (EPS) number needs to top Wall Street expectations of $1.19 in order for the stock to show short-term strength.

Kuo says that this is doable for Apple if it reports a strong fiscal Q3 from its second-largest business unit, Services, a decline in the cost of components, and a weaker dollar. With the market taking a beating today, Apple's shares are currently trading at $192.55 down $3.05.

Apple last reported earnings in May and announced record fiscal second-quarter iPhone revenue of $51.33 billion and an all-time high in Services revenue which was $20.91 billion. The Services unit, called an "under appreciated asset" by securities firm Wedbush, consists of Apple Pay, the App Store, Apple Care, the Apple Card, iCloud, Apple Music, Apple News+, Apple TV+, Apple Arcade, Apple Fitness+, Apple One, Apple Pay Later, and more.

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