Proactive Investors - Apple Inc (NASDAQ:AAPL, ETR:APC) has sunk to a four-month low as investors fret about various challenges, particularly in the Chinese market where iPhone sales have been sluggish, but analysts at Wedbush remain optimistic.
"While investor sentiment around the AI revolution is reaching a feverish pitch... Street sentiment and worries around the Apple story resemble that of a horror show right now," said Wedbush analyst Dan Ives, who said China "remains the dark cloud" in the near-term but sees "brighter days ... ahead".
Data released today on smartphone demand in China, a region that represents roughly 20% of global iPhones, has shown very sluggish sales for iPhones in this key region during and leading up to the important Chinese New Year, while local rival Huawei has enjoyed strong momentum.
Apple is aiming for iPhone sales to be roughly flat for the year, with the March quarter expected to be tough in the region.
Amid these challenges, including reports of discounting iPhone 15 prices in China and discontinuing the EV project to focus on AI, Ives said there were reasons for optimism.
His confidence is based on several factors: iPhone sales estimates for 2024 "remain hittable" and for 2025 are "conservative"; belief of the pent-up demand for the iPhone 16 upgrade; consistent growth from Apple's Services arm; and AI "finally coming" to upcoming Apple products.
Furthermore, Apple's strong installed base, comprising 2.2 billion iOS devices, is the strongest of any company in the world, presenting significant further monetization opportunities.
Despite the current dark clouds from China, Ives took confidence from the company's ability to navigate difficult periods like this successfully in the past.
With an 'outperform' rating and a $250 price target on Apple, Wedbush's said its approach was all about getting through this tough next couple of quarters and "getting on to the other side" of easier year-on-year comparatives, AI announcements and a stronger upgrade cycle from the iPhone 16.