Morgan Stanley analysts have observed stronger-than-expected Apple (NASDAQ:AAPL) iPhone 15 builds in July, leading to a significant upward revision in September quarter iPhone production.
The latest checks from Morgan Stanley's Greater China Tech Hardware team indicate that iPhone builds for the quarter have been increased to 54 million units, an 8% year-over-year growth, marking the highest September quarter iPhone builds on record.
The investment bank says this increase represents a boost of 2 million units above prior expectations and reflects continued late-cycle strength for the iPhone 15.
Specifically, the iPhone 15 and iPhone 15 Pro/Pro Max models each saw an additional 1 million units in builds, according to Morgan Stanley.
This revision is said to suggest potential upside for Apple's September quarter revenue, as the new build forecast implies 10% year-over-year growth in iPhone shipments, which is 5% above Morgan Stanley's previous forecast and 10% above the consensus estimate.
While the September quarter strength is notable, analysts caution that it's too early to predict any adjustments to December quarter iPhone 16 builds.
They maintain their current forecast of 85-90 million units for the second half of 2024, with potential adjustments expected only after early iPhone 16 pre-order data becomes available in October.
They add that the stronger-than-expected iPhone 15 performance in July could increase the odds of a September quarter revenue beat, with total revenue growth now projected at 7%, two points higher than earlier forecasts.
However, the bank believes the performance of the iPhone 16 remains the key factor for influencing the December quarter outlook.