Apple's stock paces Dow laggards as a rare bear voices concern on iPhone sales

By Emily Bary

A Barclays analyst says the December quarter 'looks to be increasingly at risk' as iPhone demand could disappoint

The great debate over iPhone 16 demand rages on.

Analysts generally look at online lead times to gauge the early success of new iPhone models, but that's an imperfect indicator as wait times reflect not just demand for devices, but also supply. While some have been skeptical about initial demand for the iPhone 16 line based on shorter-than-usual wait times, others have noted that Apple (AAPL) had better supply on hand with this year's models.

Still, analysts continue to weigh in on the dynamic, and Barclays analyst Tim Long became one of the latest to do so in his Tuesday report. He noted "much shorter" wait times in the first week of sales for the new lineup relative to what was seen a year ago.

Read: Apple's business is way more dependent on the iPhone than you might think

"While the supply chain constraints on [iPhone 15 Pro] models extended lead times last year," his review of delivery times this year "nevertheless points to potentially weaker-than-expected demand, especially across U.S. and China," he wrote.

Long is also worried about the possibility that Apple has cut orders for the December quarter at one of its Taiwanese suppliers, based on his channel checks. That, "if confirmed, would be the earliest build cut in recent history," he wrote.

Apple didn't immediately respond to a MarketWatch request for comment on the potential build cut.

Apple shares are down 3.3% in morning trading Tuesday and pacing Dow Jones Industrial Average laggards.

Analysts are fairly bullish on Apple shares, and only two of the 48 tracked by FactSet rate the stock the equivalent of sell. Long is in the small bearish camp, holding an underweight rating on the stock, and he worries about December-quarter expectations.

That period "looks to be increasingly at risk with the recent order cuts if sell-throughs continue to disappoint," he wrote. Factors weighing on demand include the "staggered roll-out of Apple Intelligence, limited adoption of AI outside of the U.S. and lack of hardware differentiation," according to Long.

JPMorgan's Samik Chatterjee was more upbeat about iPhone trends in a Sunday report, writing that "Pro model lead times remained steady contrary to a moderation being typical in prior years" in the third week of sales.

That's one factor "highlighting the likelihood that the initial slower momentum in demand for the Pro models is correcting itself with the release of Apple Intelligence drawing closer," he added.

Opinion: Apple investors get a raw deal with iPhone 16 - but customers get a bargain

-Emily Bary

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10-01-24 1058ET

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