Apple Plans to Big Sales Drop as Investors Await iPhone with Generative AI Power
Analysts predict that in the first three months of 2024, iPhone sales—which make up over half of Apple's revenue—will decline by 10.4% on average.
Apple Plans to Big Sales Drop as Investors Await iPhone with Generative AI Power
On Thursday, when the tech giant is anticipated to post its largest quarterly revenue loss in more than a year, attention will be focused on Apple's strategy to incorporate generative AI into its iPhones and boost slumping sales in the vital Chinese market.
Wall Street has long regarded Apple as a must-own stock, but in recent months, the company's shares have underperformed compared to other Big Tech companies. They have fallen more than 10% year to date as concerns about Apple's sluggish rollout of AI services and the rise of Huawei in China have been more prevalent.
According to LSEG, analysts predict that iPhone sales, which make up over half of Apple's income, will decline by 10.4% in the first three months of 2024. It would be the steepest decline in almost three years.
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Apple Plans to Big Sales Drop as Investors Await iPhone with Generative AI Power
According to LSEG, analysts predict that iPhone sales, which make up over half of Apple's income, will decline by 10.4% in the first three months of 2024. It would be the steepest decline in almost three years.
After losing to Microsoft earlier this year for the title of most valuable corporation in the world, Apple's market value is currently $2.68 trillion, or approximately Rs. 2,23,68,017 crore, following a decrease in its share price in 2024.
After years without significant updates, Apple is under pressure to improve its flagship product due of weak revenue and declining stock prices.
According to Bloomberg News, the business is in discussions with OpenAI and Alphabet-owned Google to integrate genAI capabilities for the iPhone. These features may be introduced at what is anticipated to be its largest-ever annual developer conference in June.
Analysts think that the next iPhone series, which is anticipated to be revealed in the fall, may see a spike in demand as a result of this AI integration.
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Apple Plans to Big Sales Drop as Investors Await iPhone with Generative AI Power
Tim Cook, the CEO of Apple, has talked about his intentions for the burgeoning technology far less on quarterly conference calls than leaders at Microsoft, Alphabet, Meta Platforms, and other large tech companies have in recent months, when they have hyped up their AI initiatives.
By including AI capabilities in iPhones, Apple may also be able to more effectively compete with Huawei and Samsung Electronics, who earlier this year overtook Apple as the leading smartphone provider in the world due to consumer desire for the AI features found in Samsung's Galaxy S24 devices.
Apple is well-positioned for a strong iPhone 16 cycle thanks to incremental generative AI features and replacement cycle tailwinds," Bernstein analyst Toni Sacconaghi stated this week, raising his rating on the company's shares from "market-perform" to "outperform.
Given its very feature-sensitive installed base, we feel the current slowdown in China is more cyclical than structural. We also point out that historically, Apple's China business has demonstrated significantly higher volatility than Apple overall.
Updates on the company's stock repurchase plan and the Vision Pro, which launched in February and is Apple's first significant product in years, will also be closely monitored during Thursday's earnings report. 
Apple Plans to Big Sales Drop as Investors Await iPhone with Generative AI Power
Following the initial excitement, there have been indications that the $3,500 device's demand has slowed down. This month, an analyst reported that Apple has lowered its mixed-reality headset manufacturing projections.
Soft demand is also hurting the company's other hardware division; sales of iPads and Macs are predicted to drop 11.4 percent and 4.3 percent, respectively, in the March quarter Apple has indicated that it is concentrating more on the devices, which have also been hindered by a dearth of significant updates.
Later this month, the company is anticipated to showcase a redesigned iPad lineup at an event, and according to media reports, it intends to upgrade every Mac model with faster, AI-focused M4 CPUs.
With revenue growth of 7.7 percent, the services sector, which includes revenue from the App Store and subscription services like Apple TV, is predicted to continue to be a strong point.
Written By: Varinder Singh Edit by Jitesh Sharma | Updated: 2 May 2024 3:17
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