Investing.com — barclays (LON:) lowered its forecast for Apple (NASDAQ:) on Wednesday, pointing to potential risks for the company to miss expected guidance when it reports earnings on January 30th.
The investment bank said its supply chain research showed weaker-than-expected iPhone SE4 sales in the March quarter and continued wafer cuts by TSMC, leading to a reduction in six-month lead times. This may affect iPhone 16 production through the September quarter. .
According to the company, recent smartphone subsidies in China favor devices in the low to mid-price range, excluding high-end models like the iPhone, so despite the price cuts, the iPhone has lost market share in China. He continues to lose it.
Barclays analysts expect the company’s performance to be flat or slightly worse in the December quarter, with an estimated 76 million iPhone sales compared to the 77 million expected. On a more positive note, it expects services growth to be slightly outpaced by a 15% increase in App Store revenue in the quarter, estimating a 13% to 14% year-over-year increase.
Guidance for the March quarter is expected to be the focus of the company’s next earnings report.
Analysts remain cautious about guidance due to mixed iPhone data points, concerns about slowing sales and downward revisions to production.
Analysts Tim Long and George Wang highlighted that “despite gradual discounts, iPhone sales in China are down 5% since the beginning of the year.” Additionally, foreign exchange headwinds due to the strong dollar could impact forward guidance.
Analysts expect iPhone sales to reach 51 million units in the March quarter, slightly below the consensus estimate of 53 million units.
They lowered their forecast for the quarter due to the SE4’s delayed launch and now expect only 3 million SE4 units to be sold in the same period. Some of these units were transferred to the June quarter.
As a result, analysts slightly lowered their 2025 EPS forecast from $7.27 to $7.25, and also lowered Apple’s price target from $184 to $183.
According to Barclays supply chain research, wafer cutting at TSMC is impacting production forecasts for the September quarter, with IP16 production at around 4 million wafers due to six months of lead time before wafers begin shipping. It is decreasing.
In addition to guidance, investors are also likely to focus on China’s revenue growth and capital expenditures (capex) in the upcoming report. While capital spending may be in the spotlight, analysts expect Apple to maintain its current pace of quarterly capital spending for the time being.
“While we believe AAPL’s capital expenditures will ultimately increase due to investments in internal ASICs for AI servers, that increase may be slow and light in overall magnitude.Investors “As attention shifts to IP17, this product’s lack of hardware capabilities could lead to further disappointment,” the analyst noted.
As for Apple’s AI efforts, the market response to Apple Intelligence has been weaker than expected, with key features such as an updated Siri engine and additional language support not expected until after March 2025.
According to Barclays, this, along with regulatory restrictions in the EU and China, is expected to limit Apple’s ability to bring AI capabilities to its devices for the time being.
“We believe that before AAPL deploys AI capabilities in China, it needs to find a local AI partner in China and make Chinese language AI available,” Long and Wang. said.
Analysts said regulatory challenges include slow iPhone replacement cycles, loss of market share in China to Huawei and local competitors, and potential risks to the App Store from ongoing litigation and epic litigation. It also highlighted some downside risks for Apple.
