Apple, the world’s most valuable company, is expected to announce a decline in iPhone sales for the April-June quarter. Analysts believe that the sluggish economy, coupled with consumers eagerly awaiting the release of a new model, contributed to this dip in sales. As a result, there is a pressing need for Apple to highlight how it plans to leverage artificial intelligence (AI) for future growth.
Refinitiv predicts that Apple’s total quarterly revenue will experience a 1.6 percent drop, marking the steepest decline in third-quarter revenue since 2016. The Visible Alpha survey of 24 analysts forecasts more than a two percent decline in iPhone sales during this period, in contrast to the nearly three percent increase seen a year ago. In the previous quarter, iPhone sales only rose by 1.5 percent.
While other Big Tech companies such as Meta Platforms, Alphabet, and Microsoft have maintained resilience in their cloud businesses and witnessed a surge in digital ad sales, Apple is vulnerable to general macroeconomic trends. Apple is not immune to general macroeconomic trends and will continue to set the pace (for the smartphone industry) for quite some time, said Bob O’Donnell, founder of TECHnalysis Research.
With the anticipation building for the launch of the iPhone 15, which is expected to feature the more universally accepted USB-C port on select models, analysts predict a potential boost in iPhone sales for the July-September quarter. However, the overall outcome for this period remains uncertain.
Apple has traditionally refrained from discussing AI at its events, in contrast to its tech counterparts Alphabet and Microsoft. However, Bloomberg News reported last month that Apple has been quietly developing its own framework to create large language models called Ajax. Analysts at Wells Fargo believe that any commentary on Apple’s AI aspirations could have a positive impact on the company’s stock.
The decline in iPhone sales is expected to be primarily driven by the Americas, where revenue is predicted to fall by six percent. In China, Apple’s third-largest market, sales are anticipated to remain flat due to an uneven economic recovery. However, Apple has fared better in the country compared to its Android competitors. According to market research firm IDC, overall smartphone shipments in China declined by 2.1 percent in the second quarter.
While Mac and iPad sales are predicted to drop by 10.6 percent and 11.2 percent, respectively, according to Refinitiv data, Apple’s services business, which includes the App Store and audio and video streaming services, could provide a bright spot. Analysts believe that increased activity in the ad market and price hikes for iCloud subscriptions could lead to a 5.7 percent growth in the services business, aligning with growth patterns seen in the preceding three quarters.
In conclusion, Apple’s upcoming quarterly report is set to reveal a dip in iPhone sales, mainly attributed to economic headwinds and the anticipation surrounding the release of a new model. As the company grapples with this setback, it is essential for Apple to provide insights into its AI strategies to demonstrate its commitment to future growth. Nevertheless, analysts remain optimistic about Apple’s performance, especially with the potential for growth in India to offset any sales weakness in China.
