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New Street Research sees a 10% iPhone 16 shipment miss by Investing.com

Investing.com — In a note on Wednesday, New Street Research analysts predicted a 10% shortfall in iPhone 16 shipments for FY25, projecting 215 million units, which is below consensus estimates.

Early signs indicate that consumer reception of the iPhone 16 has been lukewarm, with analysts attributing this to “disappointing innovation” and delays in Apple (NASDAQ: ) Intelligence, the company’s generative AI platform.

Despite these concerns, New Street believes the stock will only experience a temporary decline, noting that Apple has become less sensitive to iPhone performance in recent years.

They maintain a Neutral rating on Apple with a price target of $225, which is based on 30x FY26 EPS and represents a 40% premium to Apple’s five-year average valuation.

The report points out that while generative AI is expected to revolutionize wearables over time, it will not be a key driver of this product cycle.

The firm believes Apple’s AI, dubbed Apple Intelligence, has the potential to transform user interactions through natural language processing and context awareness.

However, according to New Street Research, these features are “unlikely to result in game-changing user experiences” during this cycle.

Instead, they predict AI will become more deeply integrated into Apple’s ecosystem over time through subsequent software updates.

One of the most notable aspects of the AI ​​launch is its compatibility with devices powered by Apple’s A17 Pro and M1 chips, comprising 200-250 million devices, which is about 10 percent of the company’s active installed base, New Street said.

While this offers long-term potential, the firm does not expect it to generate significant hardware sales in the near term.

New Street suggests investors are tempering their expectations for the iPhone 16 while keeping an eye on Apple’s longer-term AI prospects.

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