Apple Faces Sales Challenges as iPhone Demand Declines in China

December Forecasts Adjusted: After Apple Inc.’s AAPL market share in China decreased during the third quarter of 2024, UBS is projecting weaker iPhone sales this December.

Analyst Insights: UBS analyst David Vogt has revised the iPhone sales forecast downward, attributing this to declining demand and Apple’s shrinking market share in China. Consequently, the brokerage anticipates that these factors will negatively affect Apple’s overall revenue and earnings for the quarter.

As a result of the adjustment, UBS has lowered its revenue estimates by 2% for the quarter, along with an updated earnings per share (EPS) forecast. The analysis highlights that Apple is facing tough competition from Chinese brands such as Huawei and Xiaomi. Currently, UBS holds a ‘neutral’ rating on Apple, with a price target of $236 per share.

Future Prospects: Despite current challenges, Apple’s upcoming updates to iOS 18, iPadOS 18, and macOS Sequoia 15.1 are anticipated to enhance sales as the company looks to expand into new markets in 2025. However, Huawei has announced substantial discounts on its premium smartphones for the New Year, creating added pressure on Apple in this vital market.

In the third quarter, Apple saw a slight drop in its smartphone sales in China, which decreased its market share to 15.6%. During the same period, Huawei’s market share grew to 15.3%, while Vivo continued to lead with a 18.6% share.

Analyst Opinions: According to Benzinga, AAPL holds a consensus ‘buy’ rating with an average price target of $245.27, based on evaluations from 30 analysts.

The highest price target reported by analysts is $325 from Wedbush Securities, which maintains an ‘outperform’ rating since December 26, 2024. Wedbush anticipates a 26% rise for Apple stock, driven by an expected AI-fueled iPhone upgrade cycle extending through 2025.

Additionally, Morgan Stanley has reaffirmed its ‘overweight’ rating, citing AI advancements as a crucial factor in driving iPhone upgrades in fiscal 2025.

Conversely, Barclays presents a more cautious outlook with an ‘underweight’ rating, suggesting the lowest target price of $184 per share. Their concerns include delays regarding ChatGPT integration, staggered launches, lackluster initial enthusiasm, challenges in the Chinese market, regulatory issues, and Huawei’s competition in the 5G segment.

The averaged price target of $286 proposed by Wedbush, Morgan Stanley, and Needham suggests a potential upside of 14.21% for Apple under Tim Cook’s leadership.

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