Apple’s (AAPL) new iPhone 16 has received mixed reviews. Antoine Chkaiban, technology infrastructure analyst at New Street Research, predicts the company will be a major backer of artificial intelligence (AI), speaking to Julie Hyman and Josh Lipton on Market Domination Nevertheless, we detail why we are concerned about the iPhone maker in the short term.
“We are concerned about the next cycle for various reasons,” says Chkaiban. “There are early data points that suggest poor reception on the iPhone 16. Users are often disappointed. They believe there are limits to innovation.” He added that being delayed until after the initial launch is “not very helpful.”
Other factors contributing to Apple’s near-term headwinds include shorter refresh cycles due to “iPhone users using their devices for longer periods of time,” and increased competition in China. Another concern is the overall weakness in consumer demand.
Chkaiban predicts Apple will ship 215 million iPhones in fiscal 2025, 10% below consensus expectations.
Despite short-term concerns, analysts said Apple is best positioned in the AI era. He explains: “The generative AI iPhone revolution will certainly not be hardware-driven; it will occur over multiple cycles. It will not create short-term product cycles, but it will revolutionize the user experience over time. , I believe Apple, which controls a large ecosystem of high-end devices, is in a very good position to capture some value.
“Over the next few years, as Apple’s intelligence unfolds, we think Apple will do well with generative AI. But that won’t drive short-term product cycles. That’s what we’re concerned about. is”
He expects Apple’s revenue to increase, but that growth will come from services rather than device sales. “The bottom line is that Apple can probably grow mid-to-high single-digit sales and low-to-mid-teen digit profits. Well, in the long run, Apple is definitely worth owning. I think it’s a good name. And if there is indeed a pullback related to the weakness in the current cycle, that would probably be a good entry point.”
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This post was written by Naomi Buchanan.
