Apple (AAPL.US) shares rose on Monday, outperforming some smartphone industry peers facing cost pressures, driven by broad analyst optimism regarding iPhone demand prospects. A recent internal survey conducted by Morgan Stanley analyst Erik Woodring between September 25 and October 22 indicated that iPhone demand remains robust across multiple markets. The proportion of users intending to upgrade their iPhones within the next 12 months increased to 37%, up 2 percentage points year-over-year, with the upgrade rate in China reaching a record high. Previously, research firm Counterpoint Research reported that iPhone sales in China grew 23% year-over-year in the first nine weeks of this year, while the overall smartphone market declined by 4%, highlighting Apple's relative strength in the Chinese market. At the industry level, strong demand for artificial intelligence has led to a supply shortage of memory chips, prompting several hardware manufacturers to raise product prices. However, Apple has not yet followed suit with price increases. Woodring believes that with "iPhone 17 pricing expected to remain stable" and "weaker demand for Android manufacturers due to price hikes in mid-to-low-end models," Apple could be the only major smartphone vendor to gain global market share this year. Meanwhile, market expectations are high for a potential foldable iPhone release. Such a product would represent one of the most significant design changes in iPhone history. The survey revealed that approximately 27% of iPhone users globally are "very interested" in foldable devices, with that figure nearing 40% in China. Bank of America analyst Wamsi Mohan also noted that a foldable iPhone, as a major form factor innovation, is likely to see strong initial demand, with supply chain preparations indicating shipment volumes of 10 to 20 million units, significantly higher than competitors. Analysts emphasized that recovering iPhone demand is crucial for Apple. According to FactSet data, the market expects iPhone sales to reach $242.9 billion in fiscal 2026, up approximately 16% from the projected $209.6 billion in fiscal 2025. Additionally, improvements in artificial intelligence features are seen as a potential catalyst. Although current AI upgrades from Apple have not fully captivated consumers, Woodring stressed that AI functionality remains a key focus for users. Apple currently lags behind the Android camp in this area, but upgrades to Siri and Apple Intelligence expected in 2026 are viewed as an important foundation for future monetization. In terms of stock performance, Apple shares rose 1.4% to $251.49 on Monday, while the S&P 500 index gained 1.1%. Improving overall market sentiment combined with enhanced fundamental expectations supported Apple's stock performance.
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