Wedbush analysts said Apple's demand for iPhones in the Chinese market continues to be strong, and strong overall demand may help Apple become the first company with a market value of US$4 trillion in 2024. Rumors about Chinese government agencies and some companies banning iPhones likely won't have much of an impact on Apple's bottom line. At least Wedbush's note to investors found this formulation credible.
Wedbush wrote: "While concerns surrounding the iPhone ban in China currently linger, the issue is very manageable, and based on our recent surveys, demand for Apple phones in this key region has not diminished."
Wedbush believes that Apple will enter a strong holiday season due to strong upgrade demand in the U.S. and Chinese markets, and iPhone 15 growth should exceed market expectations for the December quarter. In its latest supply chain check in Asia, it found no "negative revisions" that could impact holiday and early 2024 iPhone sales. This shows that "so far, the consumer demand environment surrounding iPhone15 is very stable."
According to sales surveys, Apple's iPhone 15 sales in 2024 will be between 220 million and 230 million units. If the pace of upgrade activities continues, sales are expected to increase in the next few quarters.
Despite the headwinds of Huawei and geopolitics, analysts believe that public opinion "still underestimates the potential upgrade opportunities in the Chinese market." The report said that during the upgrade window, Apple's iPhone sales are expected to reach 100 million units. This even takes into account that the average selling price has increased from $825 to $850 in recent years to $925 now.
In addition, reports of moving more production from China to India were also seen as "helping to successfully downplay the negative impact from the Chinese government during September/October."
A return to solid double-digit growth in services and high unit sales of iPhones run counter to what Wedbush believes is the "death-of-growth story" that bear market investors continue to push. The story is "a dynamic we've seen continually over the past decade, and this is just another chapter in the book."
There are approximately 240 million iPhones in the upgrade window worldwide, and Wedbush believes this is a "golden opportunity to hold Apple stock next year."
Wedbush maintains its "outperform" rating and $250 price target updated in early December.