Apple set for big sales decline as investors await AI in iPhone
Apple is bracing to report its quarterly sales results, which analysts predict will reveal the company’s biggest revenue decline in over a year.
The tech giant’s focus is likely to be Apple’s plans to introduce generative AI into its iPhones to boost sales and revive the sagging Chinese market.
Apple, once considered the must-own company on Wall Street has underperformed in recent months. Its shares have been down more than 10% in one year as concerns have grown over its AI roll-out, and a resurgent Huawei is gaining market share in China.
According to LSEG, analysts, on average, see Apple iPhone sales falling by 10.4% during the first quarter of 2024. This would be the biggest drop in over three years.
Analysts believe Apple’s revenue total declined by 5% during its second quarter. This included the months of January to March. This would be Apple’s largest revenue drop since December 2022, when revenues fell by 5.5%.
Microsoft has surpassed Apple as the most valuable company in the world. After the drop in share prices in 2024, its market value is now $2.68 trillion.
Apple iPhone has been under pressure to upgrade its flagship product after several years of no major updates due to weak revenue and declining shares.
Bloomberg News reported that Apple is currently in discussions with OpenAI, Alphabet’s Google, and other companies to develop genAI capabilities for the iPhone. These features could be revealed at the largest developer conference ever, held in June.
Analysts are predicting a surge in demand for Apple’s next iPhone, expected to launch this autumn, due to the integration of advanced AI features.
Apple CEO Tim Cook, however, has talked much less about his AI plans than executives from Microsoft, Alphabet, and Meta Platforms.
Apple could compete with Huawei Electronics and Samsung Electronics better by adding AI to iPhones. Samsung Electronics has reclaimed its title as the top smartphone manufacturer in the world from Apple this year. This was due to the demand for AI features on the Galaxy S24 phones.
The analyst Toni Sacconaghi, a Bernstein analyst said that “replacement cycle tailwinds” and “incremental generative AI features” set Apple up well for the iPhone 16 series. He upgraded his rating to “outperform”, from “market perform”, this week.
Apple China’s business has historically been more volatile than Apple in general due to its feature-sensitive installed bases.
In February, Apple released Apple Vision Pro, its largest company in many years and the first new product in years.
There are signs of a slowdown in demand for this $3,500 gadget after initial excitement. This month, an analyst reported that Apple had lowered its estimates of production for the mixed-reality headset.
Apple’s rest of its hardware division is also suffering from a soft market. Sales of iPads and Macs are expected to drop by 11.4% and 4,3%, respectively, in the quarter ending March.
Apple announced that it will be focusing more on its devices. These have been hampered by the lack of significant upgrades.
Later this month, Apple plans to unveil a new iPad lineup at an event they are hosting. Additionally, media reports suggest Apple plans to update every Mac model with faster M4 AI processors
Analysts predict that the services sector, which comprises subscriptions and App Store revenue, will experience a growth of 7.7%.