Top Analyst: Apple Faces Softer iPhone Demand and Limited AI Impact Amid Supply Improvements
1min read Apple's latest iPhone lineup is encountering a mixed reception as UBS Evidence Lab data highlights shorter wait times and relatively stable supply compared to last year. According to UBS analyst David Vogt, the data suggests that iPhone demand remains softer this year, and the introduction of Apple Intelligence, the company's AI assistant, has not yet generated a noticeable spike in sales.
Wait times across 30 geographies indicate that iPhone availability is either consistent with or better than last year, a sign that supply chain constraints have eased. This improvement in supply aligns with Apple's efforts to stabilize its production pipeline. However, the downside of this development is that demand has not kept pace, potentially signaling consumer hesitation or market saturation.
The recent rollout of Apple Intelligence in US English, Apple's AI-driven assistant, was expected to create some momentum for the brand's newest devices. However, UBS notes that there has been no week-over-week increase in US wait times, suggesting that AI features are not yet a significant driver of demand. While the holiday season could offer an opportunity for greater consumer engagement with Apple Intelligence, UBS remains skeptical that the feature will meaningfully impact sales in the current quarter.
For the December 2024 quarter, UBS projects Apple to sell approximately 78 million iPhone units, which represents a flat year-over-year performance. This aligns with the analyst’s view that Apple still lacks a groundbreaking AI application capable of boosting demand in the near term. While the company’s AI capabilities may evolve to play a more critical role in its ecosystem, the immediate financial impact appears limited.
The data provides a nuanced view of Apple's position in the highly competitive smartphone market. On the one hand, shorter wait times reflect the company’s ability to address supply challenges, a positive development for its operational efficiency. On the other hand, the apparent stagnation in demand suggests that Apple faces hurdles in driving growth through innovation alone, particularly as rival firms increasingly integrate AI into their offerings.
Looking ahead, the holiday season will be a key test for Apple’s latest products and features. A significant uptick in sales would indicate stronger consumer adoption of Apple Intelligence and reinforce the company’s strategy. However, if demand remains subdued, it may highlight a need for more compelling applications or innovations to reignite consumer excitement.
While Apple’s long-term prospects remain strong due to its ecosystem and brand loyalty, the near-term outlook suggests that the company may face challenges in achieving growth beyond flat unit sales. Investors will likely keep a close eye on consumer trends and any signs of evolving demand dynamics as the company navigates this pivotal quarter.