When Apple releases its fiscal first-quarter results Thursday afternoon, Wall Street will be looking closely at iPhone sales trends. The company’s flagship product is what drives much of its quarterly performance. Forecasted iPhone demand also informs analyst outlooks on the stock. Morgan Stanley and Evercore ISI hold the view that the December quarter’s results will come in-line with consensus estimates and both retained their overweight ratings. However, Morgan Stanley analyst Erik Woodring lowered his forecast for the March quarter citing both muted iPhone demand and foreign exchange headwinds. AAPL 1Y mountain Apple shares over the past year. Although Evercore ISI’s Amit Daryanani expects a “stronger for longer iPhone cycle” to be reflected in the second-quarter results, he admitted that China, a major market for Apple, “remains a key wildcard.” Apple has faced more competition in China from domestic companies and has yet to roll out its Apple Intelligence features there, leading to fears that iPhone sales will lag further. Oppenheimer’s Martin Yang said domestic Android manufacturers will overtake the iPhone’s market share in mainland China. Combined with worries over an underwhelming generative AI rollout, Yang downgraded shares to perform from outperform in a Wednesday note. “With slower-than-expected iPhone sales since last September and elevated valuation, we believe it will be challenging for AAPL to outperform,” Yang said. The anxieties surrounding a China market slowdown gives a sense of deja vu, said Woodring. Baird analyst William Power also agreed “the beginning of this year feels a lot like last year.” “Investors are once again fretting about China trends, innovation questions and potential tariff impacts,” Power wrote in a research note on Wednesday. Nonetheless, the decline in China sales last year was less than expected, Power said. While Power forecasts choppy near-term results, he remains bullish on a longer-term basis. He holds an outperform rating and price target of $260 per share. One analyst who is more optimistic about iPhone sales in China is Bank of America’s Wamsi Mohan. Apple has also shown its ability to navigate tariffs in the past, and recent price cuts on the iPhone in China now qualify some models to a 15% government subsidy, the analyst added. “China worries [are] overdone,” Wamsi said in a note on Friday. Despite expecting lighter guidance for the March quarter due to lower iPhone demand, he remains confident about other measures such as cash flow and margins, and reiterated his buy rating on the stock. —CNBC’s Michael Bloom contributed to this report.
